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Our Bureau

Equity to be trimmed by Rs 1,200 cr which is to be pref share of Govt

Kolkata , July 24

United Bank of India has finalised the capital restructuring scheme. . "The board of directors has approved the scheme and we'll place it before the Government shortly", Mr P. K. Gupta, CMD of the bank, told newspersons here on Monday.

The essence of the proposal is to reduce the present equity capital of Rs 1,532.43 crore by Rs 1,200 crore (i.e. a reduced equity capital of Rs 332.43 crore) and convert it into preference shares to be subscribed to by the Government.

Alternatively, as Mr Gupta pointed out, the Government could hold Rs 905 crore of preference shares and convert the balance Rs 295 crore into innovative perpetual debt instrument.

He explained that the reduction of the equity capital was needed in the run-up to the IPO. He indicated that the bank would shortly raise Rs 300 crore by way of Tier II capital.

The bank, as he observed, would not opt for IPO immediately to meet the fund requirement. "

Right now, I'm comfortable so far as my capital adequacy is concerned and IPO will be considered as part of long-term plan", he said.

Credit growth

United Bank, according to its CMD, posted robust credit growth of 27.52 per cent in the first quarter of the current year; gross advances amounted to Rs 16,367 crore as on June 30. Retail credit at Rs 2,910 crore represented a growth of 47.56 per cent and within this segment, housing and education loans jumped by 62.64 per cent and 81.32 per cent respectively.

As on June 30, deposits amounted to Rs 29,945 crore, posting a growth of 15.63 per cent and the share of low-cost deposit in the bank's total deposits was 45.4 per cent. In past 12 months, the bank succeeded in mobilising one million new savings bank accounts.

During the period under review, the gross NPA ratio declined to 4.64 per cent and net NPA ratio to 1.2 per cent.

Operating profit

The bank's operating profit during the period at Rs 159.55 crore was lower by 15.66 per cent as compared to the same period of last year. Mr Gupta attributed it to lower trading profit on investment portfolio (Rs crore as compared to Rs 61 crore) and higher depreciation in investment (Rs 69 crore as compared to Rs 57 crore). However, the net profit at Rs 63.5 crore showed 10.79 per cent improvement largely due to improved interest income on advances and a lower taxation provision.

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