The Hindu Business Line : United Bank steps up thrust on fee-based income

Kolkata, Nov 16 United Bank of India proposes to shortly launch online trading of shares and cash management services as part of its efforts to boost non-interest income.

“We achieved more than 65 per cent growth in non-interest income in the first half and we want to continue with it in the second half also, particularly when our net interest margin is under pressure,” said Mr P.K. Gupta, Chairman and Managing Director of United Bank, said here on Friday,

Tie-up with IDBI Cap?

For online trading of shares, the bank, it was indicated, had tied up with IDBI Capital Services, while for cash management services the vendor was being finalised. “In cash management services, we’ll start with payment and collection services,” he said.

As part of its non-interest business, the bank already sells insurance, both life and non-life, and mutual fund products. The depository services, under the brand name of United Demat, was launched in August this year. “We’ll continue to leverage our network for distribution of third party products like bancassurances, mutual funds and government business,” Mr Gupta said.

In reply to a question, he said that the treasury income in the first half of the current fiscal amounted to Rs 70 crore, including Rs 21 crore from capital market operation compared with Rs 10 crore including about Rs 6.5 crore from capital market operation in the same period of last year. The foreign exchange income rose to Rs 18 crore (Rs 3.62 crore).

H1 net up 43%

In the first half, United Bank posted 43.4 per cent growth in net profit at Rs 232.5 crore (Rs 162.08 crore) and 26.9 per cent growth in total business at Rs 61,693 crore. The deposit growth was 28.3 per cent at Rs 38,770 crore and advance growth of 24.5 per cent at Rs 23,193 crore. The credit-deposit ratio stood at 59.8 per cent and capital adequacy ratio at 13.9 per cent.

Growth in advances

Mr Gupta projected a 28-30 per cent growth in advances for the whole of 2007-08 to achieve a projected credit-deposit ratio of 65 per cent against the present 59.2 per cent.

“For this, we’ve to give a big push in the second half,” he said pointing out that infrastructure, manufacturing, particularly steel, SMEs and retail sectors would continue to receive attention.

In 2006-07, the bank achieved an advance growth of 42 per cent. “This year the growth will be lower because we’ll operate on a higher base,” he said, adding, “besides, the Reserve Bank of India too is not in favour of a very high rate of growth in advances”.

The retail credit as on September 30, 2007, amounted to Rs 5,908 crore (Rs 3,035 crore as on September 30, 2006). The share of retail credit jumped to 25.5 per cent. Theg ross NPAs stood at 4.1 per cent (4.37) and net NPAs 1.53 per cent (1.83).

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