The Hindu Business Line : Union Bank sees lower credit growth this fiscal

New services: Mr M.V. Nair, Chairman & Managing Director, Union Bank of India (left); Mr Rajesh Doshi, Senior Executive Director, National Securities Depository Ltd; and Mr Alok Kumar Agarwal, Chairman & Managing Director, Alankit Assignment Ltd, at a press conference in Mumbai on Tuesday.

Our Bureau

Mumbai, March 25

Union Bank of India is likely to see lower credit growth this fiscal at around 20 per cent, against the projected 23-25 per cent, said Mr M.V. Nair, Chairman and Managing Director, Union Bank of India.

The overall deposit growth too may be slightly lower than the target of 23 per cent, he said.

Mr Nair was speaking on the sidelines of a press conference to announce services of Permanent Account Number and TAN (Tax Deduction and Collection Account Number). The bank will provide these services in a tie-up with Alankit Assignment Ltd, a financial services provider company.

The bank has chosen to lower its targets for growth in order to maintain its Net Interest Margin and profitability, Mr Nair said.

On the deposit side, the bank is also planning to shed some high cost deposits, which will slow down the overall deposit growth. It plans to retire about Rs 3,000-3,500 crore of high cost deposit by this year end.

On the credit side, the bank has decided not to renew its short term large advances, in order to focus on profitability.

About the impact of the turbulence in the capital market, Mr Nair said that there would not be a negative impact on the bank’s profits.

The bank has headroom to raise Rs 200 crore of perpetual bonds and Rs 1,000 crore of Tier-II bonds, which it has kept on hold because of the uncertain interest rate scenario.

The bank should be able to maintain capital adequacy between 11.5-12 per cent, after being Basel II complaint, if it has growth of 25 per cent, he said, Mr Nair said.

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