Tag: city union bank losses news

City Union Bank (CUB) has said the bank’s overall slippages to closing advances for FY 22 would be slightly below that of the previous fiscal year while it may be more front-loaded with increased slippages in the first two quarters and substantially lesser sticky loan accumulation in the subsequent quarters of the current financial year.

The bank will complete the entire surplus Covid provision in the second quarter, after which slippages would also reduce while the recoveries from the existing NPAs would increase because of the improvement in the court processes, particularly in taking possession and selling of the properties through SARFAESI action.

At a recent earnings conference call, N Kamakodi, MD & CEO of CUB, said the total incremental slippages will be slightly better than the last financial year. The bank is expecting a better recovery in the second half of the current financial year, resulting in gross and net NPAs at the year-end being at a shade lower than the last year.

“We had a slippage of Rs 482 crore in the first quarter of financial year 2022 and slippages were front loaded in tune with our expectations. We feel it should be moderating going forward and we still expect overall slippages for financial year 2022 will be flattish or less than whatever we saw in financial year 2021,” he said.

During FY21, the bank had restructured about Rs 990 crore of MSME accounts and about Rs 595 crore of non-MSME accounts through Covid resolution framework. Apart from this, prior to Covid, it had restructured an amount of Rs 242 crore under MSME and Rs 22 crore under non-MSME accounts. “Thus, the percentage of restructured accounts outstanding as on March 31, 2021, stood at Rs 1,849 crore comprising about 5% to closing advances,” he said.

On the recovery front, Kamakodi said the bank has been engaging with the borrowers and asking them to sell their other collateral in order to reduce the outstanding, so that the existing business will be sustainable enough to take care of their cash flows.

Credit growth achieved in the first quarter of FY22 was at 5% on a year-on-year basis, mainly coming from gold loans and the non-agri gold loans.

“We are keeping our eyes and ears open to the grass root level. If we see things are stabilising and also the risk of further Covid waves gets eliminated, we will ascertain whether we should be in a position to shift before the year- we will get that clarity post Diwali,” Kamakodi said when asked about the likely further acceleration in credit growth.