Beleaguered United Bank of India has scripted a turnaround in the fourth quarter of 2013-14 by reporting an over 15 times jump in net profit to Rs 469 crore on the back of cash recovery and upgradation of accounts.
The city-based lender, which suffered a loss in the quarter-ended December 2013, made a cash recovery of Rs 645 crore in the March, 2014 quarter as compared to Rs 130 crore in the corresponding previous quarter.
In the January-March 2013 quarter, the bank had posted a Rs 31 crore profit.
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Announcing the results after the bank's board meeting here today, executive director of UBI Sanjay Arya said that the turnaround had been due to cash recovery and upgradation of accounts.
Arya said for the full year 2013-14, the bank's net loss stood at Rs 1,213 crore.
Worried over capital adequacy concerns at the end of December, 2013, the bank at the behest of RBI slammed brakes on corporate advances.
To a query, he said that there was negative growth in advances in the fourth quarter concerned due to controls on large credit.
With the bank posting a turnaround, UBI would now seek relaxation from RBI for extending credit to corporates, Arya said.
He said the bank was always a viable unit as operating margins were comparable with other good performing banks.
During the fourth quarter, operating profit of the bank stood at Rs 543 crore as against Rs 511 crore in the previous similar period.
Commenting on the disturbing results of the bank during the December quarter, he said that most of the NPAs were small loans. In addition to that, there was some issue with the IT system which Infosys had fixed it.
"Now our system is perfectly okay," he said.
Arya said the main target of the bank at the moment was NPA reductions and prevention of slippages.
Gross NPA of the bank at the end of December 31, 2013 stood at Rs 7118 crore (10.47 per cent of total advances) while Net NPA was Rs 4,664 crore (7.18 per cent).
Deepak Narang, executive director of UBI, said in the coming quarter, the bank was aiming to make a cash recovery of Rs 700 crore from asset upgradation.
During the fourth quarter, NPA reduction was to the extent of Rs 2,592 crore.
The bank was also making a robust growth in savings, Arya said, adding that accretion per month was Rs 300 crore.
Net interest income of the bank at the end of March 2014 stood at 2.45 per cent.
The bank was now Basel III compliant, he said.
