The Reserve Bank of India (RBI) has found divergence of Rs 259 crore in gross non-performing asset (NPA) of South-based private sector lender City Union Bank (CUB) for FY22.
According to the lender, RBI conducted the on-site inspection for supervisory evaluation for FY22 from October 7 to November 18 and the final meeting concluded on December 19. The banking regulator found that the net NPAs were at Rs 1,450 crore for FY22 while the CUB had reported the same as at Rs 1,191 crore, CUB said in a regulatory disclosure to the stock exchanges.
Also read: Top 50 wilful defaulters owe banks Rs 92,570 crore
CUB said that the divergence was to the tune of Rs 259 crore consisting of 13 borrower accounts (outstanding of more than Rs 1 crore) for an amount of Rs 230 crore and 218 borrowers (outstanding of less than Rs 1 crore) for an amount of Rs 29 crore.
Out of the above, four accounts for Rs 60.41 crore and one account with the balance of Rs 36 lakh, totalling Rs 61 crore, have already been classified as NPA during H1of FY23. As on date, two accounts for Rs 4.07 crore and 55 accounts for Rs 9 crore, totalling Rs 13 crore stand closed, CUB said.
The divergence in provisioning according to the bank was Rs 40 crore. The bank had reported a provision of Rs 742 crore, while RBI had assessed the provisioning requirement of Rs 782 crore. The adjusted (notional) net profit for FY22 after taking into account the divergence in provisioning now stood at Rs 719 crore as against Rs 760 crore as reported earlier.
For Q2 of FY23, CUB had registered a 52% rise in its profit after tax (PAT) at Rs 276 crore as compared to Rs 182 crore in the corresponding quarter of last fiscal. Total income of the bank stood at Rs 1,355 crore as compared to Rs 1,225 crore, logging a growth of 11%.
Also read: HDFC raises prime lending rate by 35 bps
The bank had earned a net interest income of Rs 568 crore as against Rs 478 crore, with a growth rate of 19%. However, the non-interest income was lower at Rs 173 crore as against Rs 203 crore. The absence of treasury income due to unfavorable yield movements is the key reason for the de-growth of the non-interest income, CUB had said then.
The gross NPA was reduced to 4.36% from 5.58% and net NPA was decreased to 2.69% from 3.48%. The provision coverage ratio was at 66%. The net interest margin improved was at 4.09% as against 3.95% in the corresponding period last year. The return of assets (ROA) was significantly increased to 1.72% from 1.32%.