UCO Bank expects to make a turnaround by the second or third quarter of FY20 by curtailing its non-performing assets and stepping up recovery efforts. The bank hopes to come out of the Prompt Corrective Action (PCA) framework of the RBI by the end of next fiscal.

According to AK Goel, Managing Director and Chief Executive Officer, if the bank manages to get capital-infusion support from the government and steps up its recovery efforts, it would be able to come out of the PCA framework.

“We expect 2019-20 to be a year of turnaround for us. We will lay a major thrust on recovery,” Goel told newspersons on Friday.

For the quarter ended December 31, 2018, the bank saw its losses narrowing to ₹999 crore against ₹1,016 crore in the same period last year. Net interest income remained almost flat at ₹827 crore for the quarter under review against ₹820 crore in the same period last year.

Slippages

According to Goel, total slippages during the quarter under review, was close to ₹2,230 crore, of which, nearly ₹1,000 crore came from its exposure to the IL&FS account; ₹800 crore from agri loans; and ₹150 crore from retail accounts.

“We had a total exposure of ₹1,500 crore in IL&FS, of which, ₹1,000 crore has slipped into non-performing assets (NPAs). We have also had ₹800 crore worth NPAs from agri loans. Overall recovery from agri loans has been affected due to farm loan waivers,” he said.

The bank also has close to ₹5,000 crore worth exposure in small loan accounts that are outstanding.

It is exploring possibilities for one-time settlement and relending wherever possible. This apart, it will also look at invoking SARFAESI wherever the loans are collateral-backed. Gross NPAs of the bank, as a percentage of total loans, increased on a quarter-on-quarter basis at 27.39 per cent in Q3 against 20.64 per cent in the same period of the previous financial year. Net NPA stood at 12.48 per cent in Q3 against 10.90 per cent in the same period of the previous financial year.

Provisions for NPA stood at about ₹2,244 crore in Q3 of FY19, against ₹1,682 crore in the same period of the previous financial year.

UCO Bank is also expecting to recover close to ₹1,500 crore from two to three major accounts referred to the NCLT, including Bhushan Power and Essar Steel, by March this year.

The bank has close to 168 cases amounting to ₹23,169 crore under the NCLT, of which, 96 cases, amounting to ₹13,991 crore, have been admitted so far.

It has already received ₹1,757 crore as settlement towards three cases referred to the NCLT so far.

“We are hoping to get resolution in two big cases and recover close to ₹1,500 crore by March 2019. We are also hopeful of making good recovery in small accounts,” he said.

Capital infusion

The bank, which has received close to ₹3,076 crore from the government during the December quarter, expects to get additional capital support this fiscal. Its capital adequacy ratio stood at 9.33 per cent, of which, CET-1 ratio was close to 7.14 per cent.

The bank’s scrip closed at ₹17.50, down 3.05 per cent on the BSE on Friday.

 

Related Topics
comment COMMENT NOW