The United Bank of India is optimistic about a reduction in gross non-performing assets and improvement in the bottomline in 2018-19 driven by the resolution of stressed assets under the insolvency and bankruptcy code (IBC).
The bank has referred 30 accounts to the National Company Law Tribunal for resolution under the IBC with an aggregate amount of Rs 5,951 crore.
Resolutions have taken place in a couple of accounts and the bank has recovered over Rs 600 crore. Buoyed by the recovery trend, the bank anticipates recovering Rs 3,000 crore through this route.
“It is expected that resolution in more accounts would take place by the end of this fiscal, which would bring down the gross and net non performing assets, thus improving the bottomline of the bank,” UBI managing director and CEO Pawan Bajaj told shareholders at the annual general meeting of the bank on Friday.
The city-based lender has reported a gross non-performing asset of 24.10 per cent of gross advances as of March 31, 2018 and has suffered a financial loss of Rs 1,454.45 crore during the year. The bank is now under the prompt corrective action framework of the Reserve Bank of India.
“The bank has submitted its business plan to the ministry that, if approved, envisages turning around into profit by the fourth quarter of the current fiscal,” said Bajaj.
The turnaround plan includes the maintaining of risk-weighted assets at an optimum level, reducing corporate exposure and focussing on retail, agriculture and MSME lending.
It will also seek to limit corporate advances to rated accounts, increase recovery and augment non-interest income and controlling cost.
In 2017-18, the retail portfolio grew 17 per cent in which the housing loan portfolio increased 21.62 per cent and car loan portfolio increased 29.28 per cent.
“All our concerted efforts are on realising the turnaround plan ahead of schedule,” Bajaj said.
Source: July 7, 2018, The telegraph