Union Bank of India, the fifth largest nationalised bank in the country, is likely to revisit its credit growth projections for the current financial year, given the prevailing inflationary conditions and higher interest rates, according to MV Nair, chairman and managing director.
“We have projected a 22 per cent credit growth and there is a possibility of this coming down. We may revisit the projections sometime during the middle of the current fiscal,” he told mediapersons here on Friday.
The bank also expects a 20 per cent growth in deposits and 22 per cent increase in advances this year. Nair said the bank was planning to restrict its non-performing assets (NPA) slippage to 1.25 per cent and its gross NPA to below 2 per cent this year.
“The slippage was Rs 1,130 crore in the September quarter, which came down to Rs 730 crore in December and further to Rs 400 crore in March,” he said, adding that the bank had fresh NPAs of Rs 3,100 crore and expected to bring it down to Rs 1,800 crore this year.
Replying to a query on how Union Bank was positioned in the current scenario where higher provisions towards pension liabilities were impacting many public-sector banks' profitability, Nair said the bank had already provisioned Rs 2,400 crore last year and would be providing Rs 800 crore in 2011-12 which will relieve the bank of some of the burdens.
Nair said the bank currently had a Rs 210-crore microfinance institutions (MFIs) portfolio and three MFIs had already approached them for restructuring. “We have already done the restructuring through the CDR (corporate debt restructuring) mechanism,” he said, while declining to comment further.
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Overseas expansion
Bank, which currently operates a branch in Singapore, is gearing up to expand its overseas presence during the current financial year. Nair said the bank was in the process of setting up branches in Sydney, Belgium and Dubai besides floating a subsidiary in the UK.
“We have already obtained the Reserve Bank of India's permission and have applied with the local regulatory authorities. Our intention is to have all these in place during this fiscal,” Nair said.