Improvement in asset quality not one-off case: Union Bank
While one quarter is too short a time span to judge whether or not this a one-off event, the bank's management feels that NPA levels are headed downwards. Union Bank's gross NPA levels fell 10 basis points to 3.66% in the July-September quarter. Also, the addition to its restructured book of R839 crore was the lowest in four quarters.
An HSBC note cautions that despite asset quality for Union Bank stabilising in 2Q, given the continuing tough macro environment, asset quality will continue to witness stress in coming quarters. These worries are reflected in the results of larger public sector banks. For instance SBI’s gross NPA levels rose 18 bps to 5.15%, and PNB;s rose 137 bps to 4.7%.
Union Bank executive director S S Mundra, nevertheless believes that the fall in NPA levels is not a one-off and is a result of what the bank has been doing over the last 3-4 quarters. “We expect to bring down our gross NPA levels to 3% at the end of the financial year from the current 3.66%,” said Mundra.
Some of the recent changes the bank has implemented include working with two general managers focused on troubled assets. Also, the bank has created separate strategies for dealing with smaller accounts and
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