city union bank – Page 2

City Union Bank hopes to maintain better asset quality in FY22 amid second wave blues

June 3, 2021 root Banking & Finance

[ad_1]

Read More/Less

Leading old private sector lender City Union Bank hopes that FY22 will not be as bad as FY21 and credit growth this fiscal for the bank could be in the mid- to high-single digit if the economic environment and Covid second wave behaved like last year.

“Though the impact of the second wave is much higher in terms of infection and mortality, its impact on bank’s growth and other parameters may not be as bad as it saw in the first wave. I do not say that we will be seeing milk and honey flowing, but it looks like now things are not as bad as the same time last year,” N Kamakodi, Managing Director & CEO, told the Q4FY21 earnings conference call.

The bank’s credit growth in first wave hit-FY21 was 7 per cent and the slippage ratio to closing advances was at 3.01%.

He said the adverse impact of the second wave on the growth and slippages would definitely be there, but it may not be as bad as the first wave. FY21 almost ended like what we thought during the beginning of the year, and we hope FY22 will not be as bad FY21. It should be slightly better, he added.

At the same time, the total lockdown in three States particularly in Tamil Nadu where CUB has the bulk of its operations, the collection efforts are dampened and some impact on the collections are there. There are no property sale transactions as government registration departments are closed. Hence, the bank expects to see some spike, but overall slippages will be slightly better than FY21.

“We expect even though for the year as a whole the slippage may be slightly lower than whatever we saw in FY21, the slippages could be front loaded may be in the first one or two quarters and we will be seeing things getting eased up once the lockdown is removed,” Kamakodi said.

The bank expects its gross and net NPA to be lower than FY21 amid some quarterly spikes.

ECLGS scheme

In FY21, the major credit growth came from jewel loan and extension of facility to ECLGS scheme. Of the ECLGS scheme under ECLGS 1, 2, and 3, it disbursed ₹2,096 crore for an exposure of about ₹10,445 crore constituting about 5.63 per cent of the advances.

“We expect a further sanction of about ₹200 crore from ECLGS 3.0 scheme. The government guaranteed ECLGS scheme 1, 2 and 3, in fact most of the credit of MSMEs and also non-MSME sector and businesses have started generating surplus. This has also resulted in improving capital adequacy ratio as the disbursement to the ECLGS scheme attracts no risk weight and is guaranteed by the government,” said Kamakodi.

The total restructured portfolio for MSME account on March 31, 2021 stood at ₹1,849 crore and overall percentage restructured account constituted about 4.99 per cent.

[ad_2]

CLICK HERE TO APPLY

Leave a comment asset quality, banking, city union bank, covid, credit growth, CUB, Deposit, Kamakodi, lockdown

City Union Bank posts ₹111-cr net

May 28, 2021 root Banking & Finance

[ad_1]

Read More/Less

City Union Bank (CUB) on Friday reported net profit at ₹111.18 crore for the quarter ended March 31. The private sector lender had reported a net loss at ₹95.29 crore during corresponding quarter previous year.

Operating profit on a Y-o-Y basis dropped 15 per cent to ₹284.7 crore (₹335.08 crore) during Q4FY21. The total income of the bank grew marginally to ₹1,121.43 crore (₹1,220.98 crore) during the comparable quarters while interest income fell by 6 per cent to ₹976 crore (₹1,042 crore).

For the full year, the bank’s net profit grew by 24 per cent to ₹592.82 crore (₹476.31 crore). For the year ended March 31, total income stood at ₹4,839.45 crore (₹4,848.54 crore).

Gross non-performing assets (NPA) in percentage terms increased to 5.11 per cent of the advances during Q4FY21 as against 4.09 per cent in the year-ago quarter. Net NPA also increased to 2.97 per cent (2.29 per cent) during this period.

The bank’s capital adequacy ratio (Basel III) as of March 2021 stood at 19.52 per cent.

[ad_2]

CLICK HERE TO APPLY

Leave a comment city union bank, npa, Q4, results

RBI’s CEO tenure cap: Here’s how it will impact Uday Kotak; HDFC Bank, ICICI Bank, Axis Bank safe

April 28, 2021 root Personal Finance

[ad_1]

Read More/Less

Analysts believe that this development is marginally negative for Kotak Mahindra Bank, as Uday Kotak, the promoter MD and CEO, will not be eligible for reappointment once his term gets over.

The Reserve Bank of India’s (RBI) final guidelines on the tenure of bank MD, CEOs, or Whole Time Director (WTD) will apply to private lenders, small finance banks (SFBs), and wholly-owned subsidiaries of foreign banks. Under the new guidelines, the post of MD and CEO of a private bank cannot be held by the same individual for more than 15 years in one go. While, in the case of a promoter MD/CEO, the tenure will be capped at 12 years. RBI has noted that under special circumstances and at the discretion of the apex bank, the term for promoter CEO may be extended up to 15 years. “Banks such as HDFC Bank, ICICI Bank, and IndusInd Bank had a change at the helm in the recent past. However, banks like Kotak Mahindra Bank, DCB Bank, City Union Bank, Federal Bank, and RBL Bank have long-running tenures (+10 yrs) of the current MDs,” said Siji Philip and Dnyanada Vaidya, research analysts, Axis Securities.

RBI guidelines negative for Kotak Mahindra Bank

For Kotak Mahindra Bank and City Union Bank, the term extension has already been done till 2024 and 2026, respectively. Analysts believe that this development is marginally negative for Kotak Mahindra Bank, as Uday Kotak, the promoter MD and CEO, will not be eligible for reappointment once his term gets over. However, he will continue to remain a stakeholder in the bank. Uday Kotak got reappointed on January 1, 2021, for a period of three years. “Hence, his tenure will now end on 1 Jan 2024 and he is not eligible for reappointment as he has already completed 15 years as the MD and CEO,” said Suresh Ganapathy, analyst at Macquarie Research in a note.

Banks to comply with RBI guidelines by Oct 1, 2021

Ganapathy also said that the second in line Dipak Gupta (current Joint MD) may not be eligible to succeed Kotak as the CEO as the 15 year cap applies for all whole-time directors (WTD) on the board. RBI circular also stated that the upper age limit for MD and CEO and WTDs in the private sector banks would continue and no person can continue as MD and CEO or WTD beyond the age of 70 years. Banks are permitted to comply with these instructions latest by October 01, 2021. It should be noted that banks with MD and CEOs or WTDs who have already completed 12 or 15 years as MD and CEO or WTD, on the mentioned date these instructions coming to effect, shall be allowed to complete their current term as already approved by the Reserve Bank.

Kotak Mahindra Bank shares were trading nearly 3 per cent higher at Rs 1,799 apiece on BSE in intraday deals on Wednesday. So far, a total of 46,000 shares have traded on BSE, while a total of 19.40 lakh shares have exchanged hands on NSE. RBI also clarified that the individual will be eligible for re-appointment as MD and CEO or WTD in the same bank, if considered necessary and desirable by the board, after a minimum gap of three years, subject to meeting other conditions. “During this three-year cooling period, the individual shall not be appointed or associated with the bank or its group entities in any capacity, either directly or indirectly,” RBI said.

HDFC Bank, ICICI Bank, Axis Bank seem fine

According to Ganapathy, the CEOs of HDFC Bank, ICICI Bank and Axis Bank have plenty of time and can be the CEO for more than a decade as they were appointed as the CEO recently. HDFC Bank CEO took charge last year whereas ICICI Bank CEO took charge a couple of years ago. Similarly, Axis CEO also can be the CEO for more than a decade.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

[ad_2]

CLICK HERE TO APPLY

Leave a comment axis bank, city union bank, hdfc bank, ICICI Bank, Kotak Mahindra Bank, md, Private banks, RBI, rbi ceo tenure, Uday Kotak, whole time directors

Banks to see growth in FY22; ECLGS and gold loans drive City Union, says Kamakodi, BFSI News, ET BFSI

April 1, 2021 root Banking & Finance

[ad_1]

Read More/Less

Growth is not a priority

City Union Bank has not put growth as a priority this year, due to the impact of Covid-19.

“In February 2020, even before the onset of Covid, we said that we are taking our legs off the growth pedal because we are not entirely comfortable with how things were panning out at that moment. After the onset of Covid also we clearly communicated that growth is not going to be a priority until things get back to normal,” said N Kamakodi, MD & CEO, Citi Union Bank.

He added that they have seen the bulk of the growth from the Emergency Credit Line Guarantee Scheme (ECLGS) and gold loans.

Credit demand

According to Kamakodi FY22 will be a better year.

“We will start the investment for particularly building the capacity of businesses only after the current capacity is fully utilised, which we believe will happen around the half of FY 21-22,” he said.

He finds the current pick-up in the economy genuine and sustainable.

In a detailed interview, Kamakodi explained that his bank will take only those accounts to IBC which are already declared as NPA. He also said that SARFAESI is much better than IBC.

On privatisation, Kamakodi said that the government should think of privatising those banks which are unable to generate the cost of capital. He also believes that DFI is an appropriate move and helps solve the problem of infrastructure financing.

[ad_2]

CLICK HERE TO APPLY

Leave a comment city union bank, dfi, eclgs, gold loans, N Kamakodi

Bank NPAs likely to shoot up during January-March quarter, BFSI News, ET BFSI

March 26, 2021 root Banking & Finance

[ad_1]

Read More/Less

The Supreme Court’s decision on Tuesday to lift the moratorium on the classification of bad loans is likely to see banks classifying more overdue loans as non-performing assets (NPAs) in the January-March quarter.

The move will lead to an improvement in collection efficiencies as banks can take legal action to recover their dues. It will also bring clarity on the real impact of the pandemic on asset quality.
Banks and non-banking finance companies have reported non-performing assets numbers on a proforma basis for the past two quarters.

The real picture of the banking will be visible from March quarter. We are all keen to see how the December and March quarter goes. Till then the major focus will be to manage the portfolio till March,” said B. Ramesh Babu, MD & CEO, Karur Vysya Bank in an interview with ETBFSI in December.

He added, we are very clear, we don’t want to postpone the problem. If a borrower couldn’t service the loan even pre-covid and its aggravated now, there is no point in restructuring that account. We have decided to bite the bullet and declare that as an NPA.

The real picture of the banking will be visible from March quarter. We are all keen to see how the December and March quarter goes. Till then the major focus will be to manage the portfolio till March.B. Ramesh Babu, MD & CEO, Karur Vysya Bank

As on December 31, banks reported gross NPAs at around Rs 7.4 lakh crore. Following the Supreme Court’s order, banks can now recognise loans worth Rs 1.3 lakh crore as NPAs in January-March, which will raise the tally to Rs 8.7 lakh crore.

According to ICRA’s estimates, in the absence of the SC’s standstill order, the gross NPAs (GNPAs) of the banks stood at Rs 8.7 lakh crore, or 8.3% of advances. This, as against the reported GNPA of Rs 7.4 lakh crore (7.1%) as on December 31, 2020.

“Hence, in absence of a standstill by the Supreme Court, the GNPAs for the banks would have been higher by Rs 1.3 lakh crore (1.2%) and net NPAs would have been higher by Rs 1 lakh crore (1%)

The focus of the many banks is to deal with the current challenges than the growth,

“We had earlier stated that we will keep a pause button on the growth because we were not comfortable with the way the things were panning out,” said, N. Kamakodi, MD & CEO, Citi Union Bank.

We had earlier stated that we will keep a pause button on the growth because we were not comfortable with the way the things were panning out.N Kamakodi, MD & CEO, City Union Bank

Collection efficiencies

“Post the judgment, we believe that lenders will report actual non-performing assets in January-March, net of write-offs instead of pro forma NPAs, and that the availability of legal recourse, including SARFASEI Act, should improve collection efficiency,” brokerage Emkay Global Financial Services said.

It said that actual recognition of NPAs would lead to margin compression for banks due to the reversal of accrued interest on NPAs.

However, most banks have made provisions on proforma NPAs, which they will be allowed to write back. This will not lead to any large impact on the balance-sheets of most lenders. Also, proforma NPAs are falling, while the provision coverage ratio has improved by an average of 300 basis points to over 70% for private banks and above 65% for public sector banks in the same period.

The proforma numbers

Following the Supreme Court (SC) stay order, banks have not tagged overdue loans as NPAs since August 2020. However, they have been listing such loans as portfolio-level proforma NPAs. For example, the actual bad debt for Axis Bank at the end of December 30, 2020, was 4.55% of its total loans while it reported NPAs of 3.44%. For Bank of Baroda the actual NPA was 9.63% but it reported 8.48%. In the case of Canara Bank, the actual NPA was 8.95% and the reported one was 7.46%.

The silver lining is this is just 16% more than the currently recognised NPA level, not any huge rise as modelled by the RBI stress tests.

RBI stress tests

Reserve Bank of India, in its financial stability report in January, had said that if the economic scenario were to worsen into a severe stress scenario, the bad loans could rise to 14.8% of the loans. For public sector banks, the rate could go up to 16.2% under a baseline scenario and 17.8% in a severe stress one.

In 2011 too, banks had started accumulating bad loans after a lending binge between 2004 and 2010, but they did not declare these bad loans as bad immediately. Only after an asset quality review in mid-2015, the banks started recognising them as bad and unearthed a big mountain of NPAs.

[ad_2]

CLICK HERE TO APPLY

Leave a comment bank, city union bank, icra, Karur Vyasa Bank, npa, npas

IBC is less of resolution and more of liquidation, BFSI News, ET BFSI

March 24, 2021 root Banking & Finance

[ad_1]

Read More/Less

Bankers feel that they are not getting a good price under the Insolvency and Bankruptcy Code, which has seen dismal recoveries in many cases.

“IBC is not the right solution. It is a resolution tool. If there is no resolution, automatically it goes to liquidation. That is a big problem. Resolution can be made if the underlying business is robust, says Siby Antony, chairman of the ARC Association of India.

He says banks feel that they are not getting the right price in IBC.

“Alok Industries was thought to be a very good asset but went for 17%. Binani Cement, Essar Steel were robust businesses and saw interest from strategic investors. But there are hundreds of assets where there is no interest from investors. These are smaller assets,” he said.

The status of IBC cases

Out of the total 3,774 cases or corporate insolvency resolution processes (CIRPs) filed since the Insolvency and Bankruptcy Code (IBC) came into existence in 2016, 1,604 cases, or 43 percent have closed, by way of resolution, liquidation or other means. The rest 57 percent are ongoing with many overshooting the 330-day maximum time limit.

Of the 1,604 closed cases, only 14 percent have found a resolution, whereas 57 percent have ended in the liquidation of the companies.

Interestingly, the 72% cases of CIRPs ending in liquidation were already defunct and under the Board for Industrial and Financial Reconstruction.

About 312 cases have been closed on appeal or review or settled, 157 have been withdrawn; 914 ordered for liquidation and 221, saw approval of resolution plans.

The recovery rate for resolved cases under IBC is 44% with Rs 1.84 lakh crore recovered so far of the Rs 4.13 lakh crore admitted claims.

In case of the 12 large defaulters identified by RBI, the creditors recovered Rs 1.36 lakh crore from eight cases that have been resolved so far, with recoveries ranging from as low as 17 percent of claims in the case of Alok Industries, to almost 100 percent for Jaypee Infratech.

N Kamakodi, MD & CEO of Citi Union Bank said he preferred the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (SARFESI) over IBC.

“Since our focus is more on SME lending, we have control over the assets of the borrower. Hence, most of our resolution plans are through SARFAESI action more than the IBC.”

He added, “What is more important is whether the borrower has the skin in the game. When you want to sell it as a going concern and when there is a sufficient value, then IBC is preferable. But if the borrowers’ skin in the game is less, then the SARFAESI is a better option.”

The delays in NCLT

The 221 CIRPs that saw resolutions took an average of 375 days for the conclusion, exceeding the maximum 330 days permitted. The 914 cases under liquidation took on an average 309 days for the conclusion.

As on September 30, 2021, out of the 1,942 ongoing insolvency resolution cases, as many as 1,442 have been stretched beyond 270 days, while 349 such cases have been pending for periods of more than 180 days but less than 270 days.

Recently, the National Company Law Appellate Tribunal (NCLAT) directed to initiate the liquidation process of edible oil company K S Oils Ltd and set aside an NCLT order passed against it. Terming it “unfortunate”, the appellate tribunal observed that even after the lapse of 981 days and repeated compliance by the Resolution Professional to initiate the liquidation process, the NCLT had not considered it.

Leading bank State Bank of India, one of the Committee of Credit (CoC) Member, on behalf of joint lenders forum who collectively holds 76.53 per cent had moved NCLAT based on which the appellate tribunal had on November 18, 2019, directed lenders to consider revised plans if any within two weeks and directed NCLT to pass appropriate order in accordance with the law.

Bad bank challenge

The government is planning to set up a bad bank and an asset management company (AMC). Loans greater than Rs 500 crore which have not been declared fraudulent will be transferred to the bad bank. It is likely that the assets would not be subjected to IBC in the first instance, and the AMC will first try and revive these companies or package the loans to an investor.

Also, creditors of several companies had signed the Inter Creditor Agreements (ICA) and may continue negotiation under the framework roping in distressed asset investors. Also, most of the ICA cases will have loans greater than Rs 500 crore, which will be transferred to the bad bank. MSME will be outside the scope of IBC pending notification of the designated framework.

[ad_2]

CLICK HERE TO APPLY

Leave a comment bad bank, CIRP, city union bank, Exclusive, IBC, Kamakodi, MSME, nclt, Siby Antony

City Union Bank chief expects total recast at around 5-6%

February 9, 2021 root Banking & Finance

[ad_1]

Read More/Less

N Kamakodi, MD & CEO

Private sector lender City Union Bank (CUB) said the bank has identified accounts worth Rs 1,037 crore for restructuring during the fourth quarter of the current fiscal. Out of these, around 102 accounts amounting to Rs 517 crore are under MSME and 1,224 borrowal accounts amounting to Rs 520 crore are in the non-MSME category, N Kamakodi, MD & CEO, told analysts at an earnings call recently.

“Overall, the total restructuring will be around 5-6%, which is well within the range we shared with you all. During Q3, we have restructured 60 borrowal accounts to the tune of Rs 321 crore. The total restructured MSME accounts as on December 31, 2020 stood at Rs 807 crore consisting of 233 borrowers. The present percentage of restructured accounts stands at 2.21% of the advances, ” he said.

Recovery by the bank stands improved during Q3 as compared to Q2 and Q1 at Rs 106 crore and total recovery for the nine-month period was at Rs 215 crore. The recovery during Q1 and Q2 were at Rs 24 crore and Rs 84 crore, respectively.

“We are pushing a lot of efforts on recovery. Though we could see some improvement, but the same was not as we used to have during pre-Covid period, where we used to generally manage the addition through recovery,” he said.

According to him, currently all recoveries are happening through negotiated settlements with borrowers. Once the SC judgment comes, the recovery will be possible through SARFESI and other means. “Our recovery percentage is 70%-75%. We will re-evaluate in Q4,” he said.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

[ad_2]

CLICK HERE TO APPLY

2 Comments city union bank, city union bank chief, city union bank earnings, MSME, sarfesi

City Union Bank’s Q3 margins, asset quality improve amid profit fall

February 3, 2021 root Banking & Finance

[ad_1]

Read More/Less

Our Bureau City Union Bank has reported a 11 per cent drop in net profit at ₹170 crore for the quarter ended December 31, 2020 when compared with ₹192 crore in the year-ago period due to additional provisions made for future contingency.

Its operating profit grew 49 per cent at ₹458 crore (₹308 crore), according to a statement.

Interest income stood at ₹1,048 crore (₹1,061 crore), while non-interest income grew 61 per cent at ₹230 crore (₹142 crore). Net interest income was higher by 14 per cent at ₹489 crore (₹427 crore). Net interest margin stood at 4.16 per cent (3.96 per cent) a year-ago. NIM has increased sequentially from 3.98 per cent in Q1, 4.12 per cent Q2 FY 21 of this fiscal.

Total provisions were at higher ₹288.5 crore (₹116 crore). During December 2020 quarter, the bank has made an additional provision of ₹125 crore to meet any future contingency arising out of Covid-19 pandemic. Thus, the total provision in this regard held by the Bank as on December 31, 2020 was ₹465 crore.

Gross NPA fell to 2.94 per cent (3.5 per cent) and 3.44 per cent in the preceding quarter. Net NPA dropped to 1.47 per cent (1.95 per cent) and 1.81 per cent from Q2 of this fiscal.

Total Advances increased by 8 per cent to ₹36,504 crore from ₹33828 crore, while deposits stood at ₹43,288 crore as against ₹39,812 crore, a growth of 9 per cent.

During Q3, CUB restructured 60 MSME borrower accounts to the tune of ₹321 crore. Total value of restructured MSME accounts as of December 2020 stood at ₹807 crore comprising 233 borrowers. Restructured accounts constituted 2.21 per cent of advances, the bank said.

[ad_2]

CLICK HERE TO APPLY

5 Comments city union bank, CUB, profit fall, Q3 margins

City Union Bank launches ‘WhatsApp Banking’

January 11, 2021 root Banking & Finance

[ad_1]

Read More/Less

City Union Bank (CUB) announced that it has launched ‘WhatsApp Banking’ – taking the digitisation journey for its customers to the next level.

In a press release, the Kumbakonam-headquartered bank said CUB’s customers can now do banking through WhatsApp on the go. CUB’s WhatsApp banking offers services such as instant account opening, balance enquiry, deposit opening, mini statement, PIN generation for net/mobile banking and bill payments.

Customers can also get account information, latest on offers, banking information and answers for their queries on various banking products.

Customers can register to WhatsApp banking by sending ‘Hi’ to bank’s customer care number ‘044-71225000’ through WhatsApp, the bank said.

[ad_2]

CLICK HERE TO APPLY

Leave a comment city union bank, whatsapp banking

« 1 2