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00:00Union Bank is the company in focus. The lender posted second quarter numbers and profits jumped
00:0434 percent. We asked Nitesh Ranjan, Executive Director, to put these numbers into perspective
00:09and about the growth outlook. Listen in. So for the quarter ended September 2024,
00:15Union Bank of India has reported good set of numbers both in profitability as well as the
00:20business and also the most of the guidance parameters including the recovery and slippages
00:26bank has reported in line with the guidance. So far as margin is concerned, you will recall that
00:31we have given a guidance that during the current fiscal our NIM will be in the range of 2.8 to 3
00:36percent and in fact for the Q2 also our numbers have been 2.9 which is in the mid-range of that
00:43guidance. Having said that, there is still pressure on the cost of funds while a large
00:49quantum of deposits have got repriced over the last one year but still the deposit rates remain
00:54elevated. Our sense is that deposit rates have perhaps peaked out but it is going to remain
01:00elevated for quite some time maybe around six months or so from now till the time we see some
01:05action from RBI in terms of the rate cut. Okay, all right. So I just wanted to understand,
01:12you know, you've said that your guidance is, you know, between 2.8 to 3 percent. I just wanted to
01:18understand what is the rationale behind this given that your RAM, you know, you're saying that,
01:23you know, you expect to, you know, bank on RAM advances going forward and it's a high-yielding
01:29book for you. That is also seeing a bit of a slowdown on a sequential basis. So what is the
01:35rationale behind sticking to this guidance? So if you look at the RAM book, we have been
01:40growing in the range of 12 to 15 percent for the past many quarters if you look at the annualized
01:46growth rate. This year in the first half, first few months have been very lean actually but we
01:51have started seeing the pickup from mid-August in retail as well as the MSME sector and now being
01:58in the middle of the festive season, we feel that this trend is going to continue only and we are
02:04seeing a good traction in terms of the new sanctions both in retail as well as in MSME.
02:10So this should help us in achieving the guidance level. Sir, also wanted to understand, you know,
02:18after the whole MTNL fiasco, you know, Union Bank of India has actually, you know, let go
02:25off some of the corporate loan book exposure. So just wanted your sense on that as to, you know,
02:31going forward, what is your sense on corporate loan growth? Are you seeing some slowdown there?
02:37What is your outlook on the same? See, 45 percent of our loan book is to the corporates,
02:43right? And over the last 6 months or 12 months also, if you look at, we have seen good demand
02:49coming from few sectors within the corporate, be it road sector, iron and steel, chemicals,
02:55some of the renewables, energy, data center, logistics. So there is a good demand that
03:00we are witnessing. And of the 11 to 13 percent, the guidance that we are giving for the overall
03:06loan growth, I think corporate is going to contribute a lot. Yes, during the quarter,
03:11you might have seen there's some subdued growth in the corporate sector. That is because we have
03:16let go some of the low yielding corporate loans opportunity in the market, because we have to
03:22ensure that we are in the guided range of NIM of 2.8 to 3 percent. Otherwise, there is a good
03:29opportunity in the corporate. So going forward, which sectors are you looking at in terms of
03:35corporate loans that are attractive right now? As I said, there is no particular preference for the
03:40sector. It depends on the opportunity, the promoter and all these things. And I already
03:48shared some of the sectors from where we are seeing the good proposals are coming to us. As
03:53of now, we have close to around 35 to 40,000 groups of proposals under discussion for the
03:59sanction. And these are typically into the road sector, iron and steel, chemical,
04:04renewable energy, logistics and so on. Sir, also would like an update on the MTNL bit. Sir,
04:14what is the recovery plan on that? If you could just provide a status on that.
04:19I'm afraid I won't be able to speak about the particular accounts.
04:23Okay. No worries, sir. I completely understand. Sir, moving forward on the MSME lending space,
04:30MSME is also witnessing some slowdown. What do you think is the reason because of that? And when
04:34can we see a revival on the same? Yeah, as I said that in the retail,
04:39agri and MSME segment, first few months of this half year, we have seen very lean progress.
04:45But from middle of the August, there is a good traction, there is a good demand.
04:49And that's why you notice that even in MSME, sequential growth rate during the quarter is
04:54around 2.8%, which on an annualized basis is a good number. And as of now, we are focusing on
05:01various MSME clusters across the country. And we are hopeful that there will be good
05:07sanction and disbursement in MSME during the second half of the year.
05:11Okay. So, one thing, the slippage ratio has touched a two-year high in the second quarter.
05:22Credit costs are also rising. This is also impacting asset quality. I mean, it's not just
05:27for Union Bank of India, we are seeing this trend taking place across the banking sector.
05:33Just wanted your sense on that. Would you say that good asset quality numbers are kind of behind us
05:40now? And how do you see asset quality, the trend going forward from here on, given that the whole
05:47economy is witnessing a slowdown? First of all, you look at our guidance for the gross NPA,
05:54which is 4%. And we are moving towards that. Continuously, we are bringing down the gross NPA
06:00quarter after quarter. And this quarter, it is 4.36%. Secondly, I think from our bank data,
06:08I can tell you, we are not seeing any kind of serious asset quality concern for any book
06:15in the bank. Yes, there was a large account, which we had highlighted during the Q1 call also,
06:21that there is a stress and that stress has actually materialized and that account turned NPA.
06:26That is why the delinquency ratio, credit cost, everything looks higher for the quarter. But if
06:31you remove that one of large account, I think delinquency as well as the credit cost are either
06:36in line with what we have reported in Q1 or in fact better than that. Sir, I understand that
06:43unsecured retail book exposure is not as high for Union Bank of India. If you could just
06:50throw some light on what other segments are leading to the rise in slippages?
06:57So, if you look at the numbers for Q2, even compared to sequential basis Q1, in fact,
07:02there is decline in the new slippages in retail, agri as well as in MSME. Only in the corporate,
07:09there is increase and as I said, that is because of the one large account. Otherwise,
07:13we are not seeing any increase in the slippages. In fact, if you remove that one large account,
07:18then the slippage for the quarter for Union Bank of India is around 1800 crores,
07:23which even compared to Q1 is lower, which was around 2100 and previous year itself,
07:28it was a little higher. So, actually, we are seeing stability at the current level of,
07:33you can see on an average 2000 crores of slippages per quarter.