Kolkata-based United Bank of India is looking at corporate debt restructuring and part-recovery to convert bad loans into performing assets. The aim is to reduce provisioning in order to get back in the black.
A higher provisioning of ₹1,858 crore (on account of NPAs) led to a net loss of ₹1,238 crore during the October-December quarter.
For the nine-month period (April-December), the bank reported net loss of ₹1,683 crore and a provisioning of ₹3,351 crore.
“The bank is making operating profits. But, higher provisioning on account of sticky assets led to a net loss,” a senior UBI executive told
The board meeting took place a day after Archana Bhargava, the UBI’s CMD, put in her papers citing health reasons. According to sources, no discussions took place on Bhargava’s resignation.
UBI, the executive said, will focus on bringing down non-performing assets (NPAs) to the tune of ₹2,000 crore by the end of this fiscal through higher recoveries.
Sale of bad assets to asset reconstruction companies is also being explored.
Asset QualityUBI’s gross NPAs jumped to₹8,546 crore (that includes fresh slippage of ₹3,172 crore) in the October-Dec quarter. Gross NPAs in the corresponding quarter last fiscal stood at ₹2,902 crore.
A profit in April-June quarter (beginning of this fiscal) notwithstanding, the bank saw a 35 per cent jump in sticky assets to approximately ₹4,002 crore during the period; from ₹2,954 crore during the year ending 2012-13.
As on December 31, 2013, UBI’s gross NPAs stood at 10.82 per cent of total advances, one of the highest amongst the India banks.
NPA break-upA sector-wise analysis shows NPAs in the SME (₹2,436 crore), large industry (₹2,384 crore), agriculture (₹1,156 crore) and others (₹2,026 crore) categories to account for approximately 29, 28, 14 and 24 per cent of the total bad assets respectively. Between end of last fiscal (March 2013) and December 2013, rise in bad assets have been at over 200 per cent in some sectors such as cars, education and large industry.