Union Bank of India plans to focus on growing its retail business and recovery of non-performing assets this fiscal.

The bank will tap the home and vehicle loan segments to expand its retail portfolio, said Mr D. Sarkar, Chairman and Managing Director, Union Bank.

Mr Sarkar - former Executive Director of Allahabad Bank - took charge at Union bank of India after Mr M.V. Nair, retired on March 31.

Currently, retail accounts for ten per cent of the bank's total advances. As on December 31, 2011, Union Bank's total advances stood at close to Rs 1.5 lakh crore.

“With over 3,200 branches and 3,800 ATMs across the country, Union Bank has a strong delivery channel. We need to put this network of 7,000 odd delivery channels to optimum use in order to improve our retail portfolio,” Mr Sarkar told Business Line .

The bank, which opened about 130 branches last year, plans to set up 250 more branches this year.

NPA Management

As on December 31, 2011, the gross non-performing assets (NPA) of the bank stood at 3.33 per cent while the net NPAs were at 1.88 per cent.

“NPA management is a big agenda for us this year. We will focus on arresting slippages and initiate aggressive recovery measures, wherever possible,” he said.

Slippages have been higher in small loans such as agriculture and micro and small enterprises segment. The bank would take stock of these NPAs in a zone wise manner, he added.

Net Interest Margin

The bank's NIM improved sequentially to 3.31 per cent in the third quarter of financial year 2011-12, up from 3.21 per cent in the second quarter.

Margins are likely to remain at similar levels in the March quarter as well, he said.

The bank's asset-liability committee is slated to meet next week to take stock of its business mix.

Fee Income

The bank would focus on loan syndication and distribution of third party products to increase its fee-based income. Union Bank's fee based income grew by 20 per cent to Rs 592 crore as on December 31, 2011.

“Sale of gold coins has been a very good fee garner for us. This apart, we will also focus on loan syndication and third party products distribution,” he said.

Capital

Union Bank recently received capital worth Rs 650 crore through the issue of shares on a preferential basis to Life Insurance Corporation of India. As on December 31, 2011, the bank's capital adequacy ratio stood at 11.72 per cent.

“We are comfortable on the capital front and are not looking at infusing funds immediately,” he said.

Customer Service

Providing good customer service is the key to acquiring new customers, Mr Sarkar said.

“We are trying to groom our employees to enable them to focus on providing customer service as this is important to acquire new customers and retain older ones,” he pointed out.

Union Bank has recruited close to 2,500 employees at various levels to meet the shortage in manpower due to retirements. A majority of those recruited were young people and needed adequate grooming, he said.

Liquidity, Interest Rates

The tightness in liquidity could lead to a rate cut. The Reserve Bank of India could cut cash reserve ratio rates by 25-50 basis points in its monetary policy this month.

“We will take a call on interest rates once the RBI announces its stance in the monetary policy,” he said. The bank had recently lowered its base rate by 10 basis points to 10.65 per cent.

>shobha@thehindu.co.in

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