Month: November 2021

Union Bank of India’s second quarter standalone net profit soared 195 per cent year-on-year (y-o-y) to ₹1,526 crore against ₹517 crore, supported by healthy growth in non-interest income.

During the reporting quarter, the bank recovered ₹1,650 crore from the resolution of the DHFL account.

The public sector bank made 65 per cent provision towards its ₹2,558 crore exposure to the SREI group.

Net interest income was up 8.52 per cent y-o-y to ₹6,829 crore (₹6,293 crore in the year-ago period).

Non-interest income, comprising core fee-based income, treasury income and recovery in written-off accounts, jumped about 65 per cent y-o-y to ₹3,978 crore (₹2,406 crore).

Credit growth

Rajkiran Rai G, MD & CEO, emphasised that the bank will end FY22 with a credit growth of 6-8 per cent as demand is expected to pick up in the second half of the year.

The bank has about ₹50,000 crore of corporate loan sanctions and unutilised limits, he said.

Domestic advances declined about 2 per cent y-o-y to ₹6,19,137 crore. Overseas advances were down about 18 per cent y-o-y to ₹15,446 crore.

Rai said the bank has upped the NPA recovery target to ₹16,000 crore from ₹13,000 crore as recoveries in the first half of FY22 had already crossed ₹10,000 crore.

GNPA position improved to 12.64 per cent of gross advances as of September-end 2021 against 13.60 per cent in the preceding quarter.

Net NPAs position, too, improved a shade to 4.61 per cent of net advances vis-a-vis 4.69 per cent in the preceding quarter.

The new board and management of Infrastructure Leasing and Financial Services (IL&FS) has addressed debt of ₹52,200 crore, and has maintained its earlier estimate of resolving debt of ₹61,000 crore.

This will represent resolution of 62 per cent of the overall fund-based and non-fund based debt of over ₹99,000 crore as of October 2018.

“The debt of ₹52,200 crore addressed till date represents 86 per cent of the overall estimated resolution value of ₹61,000 crore and 53 per cent of total debt,” it said on Tuesday.

It expects to resolve around ₹57,000 crore debt by March 2022, it further said.

Available cash balance

Uday Kotak, Chairman of the board of IL&FS, said that of the ₹52,200 crore debt addressed, ₹14,100 crore has been discharged and there is an available cash balance of ₹16,700 crore. “In addition to that, we have completed sale and purchase agreements in many cases and have filed applications with the NCLT. These are in stages of completion of transactions and are pending court approval. That amount is ₹21,000 crore,” he told reporters, adding that the balance ₹4,000 crore will be the long tail, including refunds and small matters across the whole host of companies.

He said that there are multiple options for the resolution of the long tail, such as liquidation, fire sale or the current approach of hard work.

He, however, indicated that this would be decided in due course. Kotak also highlighted the high recovery from IL&FS, and noted that it is much higher than the average recovery observed under the Insolvency and Bankruptcy Code, which is around 38 per cent to 39 per cent. “Group resolution is always a big challenge in terms of recovery in IBC cases. Many cases have had very low recovery numbers. This (IL&FS) reinforces the belief that fair amount of money can be recovered even from the most distressing and complex situations,” he said.

Further, of the 347 entities under IL&FS Group as of October 2018, a total of 235 entities stand resolved till date, including resolution applications filed with courts, and applications for additional 15 entities are expected to be filed with courts by March 2022.

“Since the last update in July 2021, the group has addressed additional debt of ₹8,500 crore from monetisation initiatives, including InvIT Phase 1; Terracis Technology (erstwhile IL&FS Technologies); ONGC Tripura Gas based power project; Warora Chandrapur Road project; and IL&FS Prime Terminals Fujai,” said an IL&FS statement.

Transfer of road projects

Additionally, the group has also submitted an application with the NCLT for approval of the transfer of five road projects, with approximate resolution value of ₹4,000 crore, under Phase 2 of the InvIT.