Union Bank of India is expecting to gain from the increasing use of alternative channels to maintain its net interest margin (NIM) at a “decent” level in the current financial year.

“In the present year, we will have a positive impact on costs as 60 per cent of transactions are now happening on alternative channels,” Mr M. V. Nair, Chairman and Managing Director, Union Bank of India, told Business Line here.

The alternative channels include, among others, ATMs, and Net/mobile banking. While seeing “some pressure” on NIM this year, Mr Nair said it could still be at about 3.20 per cent in 2011-12. The NIM was at 3.33 per cent for Union Bank in 2010-11.

NPA declining

On non-performing assets (NPAs), Mr Nair said the slippage was on a declining trend.

“Last year, some of the restructured accounts got impacted and there were fresh NPAs of Rs 310 crore. But this year, the provisioning for NPAs will also come down by about Rs 660 crore,” he said.

The declining slippage and lesser provisions would have a positive impact during the present year, the CMD added.

On the high maturity levels of deposits in the present financial year (up to 60 per cent of deposits were set for maturity in the current year), he said though it was a “challenge”, the renewal pattern of deposits would cushion the impact.

The renewal rate in deposits up to Rs 15 lakh was over 60 per cent, he added.

Retail focus

In business, the focus on retail would continue. “We are preparing ourselves to be the first in giving a great experience to customers by effecting a retail transformation of banking,” Mr Nair added.

The total business of Union Bank stood at over Rs 3.55 lakh crore with a capital adequacy ratio of 12.95 per cent as on March 31, 2011.

comment COMMENT NOW