Public sector lender Uco Bank is confident of meeting Rs 3,000 crore lending target for retail and MSME segments during this festive season as around Rs 1,900 crore has already been sanctioned. The Kolkata-based bank has set a target of Rs 3,000 crore lending in retail and MSME in just two months — October and November. “This target is easily achievable. So far, Rs 1,800-1,900 crore loan amount has been sanctioned,” MD & CEO AK Goel told FE.
At the end of the second quarter this fiscal the state-run lender’s retail advance and MSME advance stood at Rs 26,311 crore and Rs 26,426 crore, respectively, registering quarter-on-quarter growths of 3.3% and 8.4%.
The bank’s operating profit for the September quarter posted a 8.7% quarter-on-quarter growth at Rs 1,330.31 crore as against Rs 1,223.37 crore for June quarter. Operating profit for the quarter was highest in last 22 quarters. The bank reported Rs 30.12 crore net profit for the second quarter this fiscal.
According to Goel, currently retail, MSME and agriculture constitute over 62% of the bank’s loan book, up from 48% earlier. “We are concentrating on retail, MSME and agriculture lending because it will reduce our concentration risk,” he pointed out.
The Reserve Bank of India (RBI) had in May 2017 initiated Prompt Corrective Action (PCA) for Uco Bank in view of high non-performing assets and negative return on assets. The bank has recently requested RBI to lift restrictions as it has fulfilled all the criteria to come out of the PCA framework.
The bank’s asset quality improved significantly in the second quarter as its gross non-performing assets (NPAs) in absolute terms fell 19.34% quarter-on-quarter to Rs 13,365.74 crore from Rs 16,576.43 crore in the first quarter this fiscal. On a year-on-year basis, gross NPAs decreased by a whopping 48% from Rs 25,665.14 crore in the second quarter last fiscal.
Total NPA reduction was Rs 3,425 crore during July-September, when cash recovery and upgradations from bad loan accounts were at Rs 490 crore.
During the period fresh slippages were Rs 215 crore, down 44% q-o-q. Gross NPAs as a percentage of total loans fell 276 basis points (bps) to 11.62% from 14.38% during the previous quarter. Net NPA ratio also decreased by 132 bps sequentially at 3.63%. “Our gross NPA ratio will be less than 10% and net NPA ratio will be less than 3% at this fiscal-end,” Goel said.