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Analyst Meet / AGM - Analyst Meet

Proposes to improve NIM to 3.0% in FY2014

United Bank of India

20-May-2013, 03:53
United Bank of India conducted an analyst meet on 17 May 2013 to discuss the financial results for quarter and year ended March 2013 and prospects of the bank. Archana Bhargava, CMD of the bank addressed the meet:
Highlights:

The business of the bank rose at moderate pace of 11% to Rs 170359 crore at end March 2013, compared to 18% growth at end March 2012. The moderation in the pace of growth was driven by deceleration in the advances growth to 9% at Rs 69708 crore, while the deposit increased at steady pace of 13% to Rs 100652 crore at end March 2013.
Bank has targeted to touch the business level of Rs 2 lakh crore in FY2014, showing 17% growth over FY2013.
CASA ratio of the bank was steady at 39.7% at end March 2013, slightly lower compared to 40.0% at end December 2012. On the other hand, the bank has sharply reduced the bulk deposits by 28% to Rs 11768 crore constituting 11.9% of the total deposits at end march 2013 compared to 18.3% at end March 2012.
Bank expects to raise the CASA ratio to 45% by end March 2014.
The moderation in advances growth was caused by subdued 1.2% growth in large and mid-corporate advances to Rs 38278 crore. On the other hand, the priority sector, MSME and retail advances increased at healthy pace of 15% to Rs 25604 crore, 21.5% to Rs 11810 crore and 22.9% to Rs 10049 crore at end March 2013.
The performance of the bank for the quarter ended March 2013 was mainly impacted by sharp 44 bps YoY decline in NIM to 2.67%, heavy fresh slippages, slight decline in CASA ratio and higher provisions.
NIM of the bank dipped to 2.67% in FY2013 from 3.11% in FY2012, while bank proposes to improve the NIM to 3.0% in FY2014.
On account of heavy fresh slippages, bank has recorded interest income reversals of Rs 60 crore in quarter ended March 2013 and Rs 210 crore for the year ended March 2013.
The net interest income of the bank was steady at Rs 2487.3 crore, while recorded strong 46% surge in non-interest income to Rs 1067 crore in FY2013, driven by 90% surge in profit from exchange transaction at Rs 108 crore, while the trading profit more than doubled to Rs 467 crore in FY2013. Further, the recovery in written off accounts increased 21% to Rs 103.5 crore, while fee income rose 7% to Rs 195.1 crore in FY2013.
Bank has made higher provision for bad loans at Rs 1010.45 crore in FY2013 compared to Rs 690 crore in FY2012. Meanwhile, the provision for pension and gratuity has more than trebled to Rs 440.42 crore in FY2013 from Rs 144 crore in FY2012. Further, the bank has also made provision of Rs 50 crore for wage revision.
The fresh slippages were substantially higher at Rs 1057 crore (annualized 6.1% of advances in Q4FY2013) compared to 4.2% of advances in Q3FY2013. The upgradations, recoveries and write-offs together were closer to slippages at Rs 995 crore for Q4FY2013, restricting the increase Gross NPA in the quarter ended March 2013.
In percentage terms, the GNPA eased to 4.25% at end March 2013 from 4.42% at end December 2012. On the hand, the NNPA increased to 2.87% from 2.22% a quarter ago and 1.72% a year ago.
Bank has restructured advances worth Rs 888 crore in the quarter ended March 2013 and Rs 2894 crore in year ended March 2013. The outstanding standard restructured advances stood at Rs 4556 crore at end March 2013 compared to Rs 3106 crore at end March 2012.
About Rs 638 crore of restructured advances have slipped to NPA at end March 2013.
The stressed assets of the bank increased to 9.5% of advances at end March 2013 from 9.3% a quarter ago and 6.6% a year ago.
Bank proposes to reduce the Gross NPA by 50% in FY2014.
Bank has opened new 49 branches in FY2013 pushing up the branch count to 1729 branches at end March 2013.
Bank also installed new 113 ATMs raising the count to 917 ATMs at end March 2013.
Bank spread it wings overseas with representative offices opened at Bangladesh and Myanmar.
Bank intends to convert the branches at Bangladesh and Myanmar as full fledged branches, while also proposes to add more overseas branches at the destination where capital requirement is not so tight.
On domestic front, bank proposes to have the network of 200 branches and 2000 ATMs by end March 2014, while bank also plans to open 5 e-lounges.
Bank also expects to increase the customer base to 3 crore by end March 2014.