Union Bank of India swings to profit, to sell Rs 7,800 cr loans to NARC

MUMBAI: (UBI) swung to a web revenue within the quarter ended March 2021 from a loss a 12 months in the past led by greater dangerous mortgage recoveries, decrease provisions and an increase in retail and agriculture loans.

The financial institution reported a web revenue of Rs 1330 crore versus a loss of Rs 7157 crore a 12 months in the past on the again of a 23% rise in different revenue to Rs 4551 crore from Rs 3697 crore a 12 months in the past primarily due to a Rs 1961 crore restoration from written off accounts.

Provisions for dangerous loans fell 65% to Rs 3850 crore in March 2021 from Rs 10,847 crore a 12 months in the past as asset high quality improved. Gross NPAs fell to 13.74% of loans from 14.59% a 12 months in the past. Net NPA dropped to 4.62% from 5.22% a 12 months in the past.

Retail, agriculture and loans to MSME segments grew by 8% led by a 12% development in agriculture and 10% development in retail even because the financial institution’s complete mortgage guide shrank 2% 12 months on 12 months to Rs 6.53 lakh crore in March 2021.

CEO Rajkiran Rai stated he expects mortgage development to choose up tempo to between 8% and 10% and web NPA to fall under 3% this fiscal.

This alongside will value financial savings related witg the merger of Corporation and Andhra Bank with UBI final April will increase profitability, he stated.

“We estimated Rs 3600 crore of cost benefits over three years after the merger out of which Rs 1240 crore has already come. We plan to shut down 750 branches out of which 400 are in the process or identified. Costs will also come down from savings in IT and other harmonies,” he stated.

The financial institution restructured loans of 1.3% of its mortgage guide in fiscal 2021. However, Rai stated it’s too early to estimate the restructuring by means of the second window opened by RBI in April whilst he expressed hope that assortment effectivity will enhance as lockdown restrictions ease from June.

As chairman of the bankers physique, Indian Banks’ Association (IBA) Rai has been intrumental in making ready the bottom for a brand new National Asset Reconstruction Company (NARC).

UBI has recognized 17 accounts value Rs 7800 crore on the market to the NARC out of which it’s the lead financial institution in two of them. “Though there are modalities to be worked out it is estimated that the banking system will put up Rs 89,000 crore of loans to sale to the NARC in the first round,” Rai stated.

UBI itself plans to step up its dangerous mortgage recoveries to Rs 13,000 crore this 12 months Rs 9000 crore of which is able to come outdoors the IBC mechanism, after recovering Rs 10,800 crore this fiscal. It expects it mortgage delinquency price to be at 2.5% or under after stress on restoration eases as development picks up following a tough first quarter.

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