Below is an edited transcript of the interview on CNBC-TV18
Q: Your asset quality has been stressed this quarter after holding up for three consecutive quarters. Can you just detail the slippages and restructured loans for UBI?
A: We have made Rs 1068 crore of restructuring this time. Last three quarters, till March 2013, we could reduce asset quality deterioration sequentially. However, because two accounts slipped back in this quarter, our estimate was around Rs 800 crore but now is it Rs 1400 crore plus.
The credit growth was not there, so suddenly my denominator came down and that is the percentage. However, overall I can tell you that whatever small accounts we really tried to maintain the same level and in that we have succeeded.
Q: Can you elaborate on the two accounts you referred to?
A: I will just tell the sector I shouldn't tell the name of the company. One is gems and jewellery sector and other is IT enabled service sector. These two are lumpy accounts, which is Rs 600 crore plus.
Q: Any chance of recovery in these accounts going forward?
A: Some issues are being discussed, especially the gem and jewellery account. They are coming with some restructuring, some recovery may be coming but let us see that if really things improve that will be better for us.
The IT accounts, one we have already restructured but because the IT sector was also not doing well in US, and they are exporting the service or I can say that they are in IT since long time. So stress was there but the company is doing their business in normal course but recovery is little under stress from that sector.
So let us see. This was not in our calculation when we had just estimated our slippage.
Q: In terms of asset quality have we seen the worst of it and going forward will you see an improvement?
A: We have geared up the field and whatever recovery estimates we could make it, whatever upgradation of the assets that has to be done, that is also in line. However, because of these two accounts, the blow came suddenly that is the reason but we are trying to maintain it below 3 percent. We have delivered in the last three quarters consecutively. However, this was an exceptional quarter because of the two big accounts.
Q: What is the pipeline for the restructured assets for the bank?
A: Restructuring should be around Rs 2200-2300 crore that is April to June quarter but two-three SEBs did not come for the restructure so that is why it was Rs 1068 crore. Those SEBs may come in the current quarter so taking this about Rs 2400-2500 crore in two-three SEBs and other Rs 2400-2500 crore in the other sectors together which is normal restructuring in the pipeline. So may be Rs 5000 crore will be restructured in this quarter taking carry forward of the previous quarter.
Q: The bank accounted for wage provisions of around Rs 45 crore this quarter also. Going forward how much more will be accounted for hence could possibly stress the overall provision figure?
A: The IBA is still collecting the data and we are in talks with RBI what the provisions will come because basel III impact also is there. But we are slowly increasing the provision for the wages also. And we have increased the amount over March 2013. So the average 4-4.5 percent we are tying to cover up but September October they should be coming and we will make provision for that also.
Also Read: Bank of Baroda Q1 net up 2.5% at Rs 1167cr on other income
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