United Bank of India has attributed the sharp deterioration in asset quality in the past year to the fact that it declared accounts under consideration for restructuring as non-performing assets (NPAs) and not as standard, as was the case with other banks.
?I would say that there were about 20 accounts amounting to R1,199 crore, which were NPAs with us, and standard assets with most other banks,? Deepak Narang, executive director, United Bank, said at a conference with analysts.
?So, we saw huge NPAs. And once they were actually restructured and moved to CDR, they were upgraded. We have upgraded six accounts amounting to R940 crore,? he said.
The Kolkata-based lender posted a net profit R469.37 crore in the fourth quarter compared to a net profit of R32 crore in the same period last year due to recovery efforts and growth in net interest income.
The bank has been plagued by asset quality issues, and gross non-performing assets ballooned to over 10% of the total advances. Currently, the bank has gross NPAs worth R7,118.01 crore or 10.47% of gross advances.
During the fourth quarter, the bank made cash recoveries worth R645 crore and upgradation worth R1,487 crore, as a consequence of which gross NPA reduction was R2,592 crore.
Sanjay Arya, executive director, UBI, said the bank is looking to upgrade loans worth R600-700 crore in April-June and will continue to focus on recoveries. He said the bank is looking to make recoveries worth R400-500 crore in the subsequent quarter and reduce bad loans.
?Of the R7,000-crore NPAs which we have currently, R4,161.60 crore are in the substandard category,? he said.
On capital raising plans, Arya said the bank is looking to raise R500 crore through the qualified institutional placement route in the next quarter. United Bank?s capital adequacy at the end of Q4 stood at 9.81% and its tier-1 capital ratio was 6.54% under Basel-III norms.
At the end of Q3, tier-1 capital adequacy ratio (CAR) was 5.59%, which was below the minimum requirement under Basel-III.
