I am happy to present before you the Annual Report of your Bank for 2016-17. Despitechallenges your Bank was able to show profit.
The dilemmas of the global economy were marked by Britain's exit from the EuropeanUnion coronation of Mr.Donald Trump bringing about shifting of fiscal and monetary policystance by the US and demonetization in India. Nonetheless the global economy withstoodvarious economic and political pressures. The IMF projected the global economic growth toaccelerate from 3.1% in 2016 to 3.5% in 2017 and 3.6% in 2018. Advanced economies areprojected to rise between 1.7% and 2% while the emerging markets between 4.1% and 4.8%during the same period. The two drivers of growth - China and India are expected towitness growth at 6.7% and 6.8% respectively in 2017-18. While China's growth rate shouldmoderate to 6.2% in 2018-19 India's is expected to touch 7.7%. Inflation is expected todouble in the US and in the Eurozone in next one year. With the strong dollar followed bythe uptick in interest rate by Federal Reserve and domestic-oriented policies due to thedevelopments in the US and the possibility of further Chinese instability the Indianmarkets may come under pressure.
Indian economy was epitomized by Demonetization. When 86% of a country's legal tenderbecomes illegal it is but expected that finding a new level of equilibrium' wouldrequire time. It was initially unsettling for all but due to some brisk actions on theparts of Government and RBI normalcy returned without much delay. It ushered in the eraof digital transactions. A constitutional amendment paved the way for the long-awaited andtransformational Goods and Services Tax. The enactment of the Insolvency and BankruptcyCode provided some potent ammunition in the hands of the Bank to combat NPA menace.
The NPA in banks has been defining the fate of banking industry for quite some time. Ithas the combined effect of chocking the income channel retarding growth of the advanceportfolio depleting the profitability and destabilizing the chain of recycling of fundthereby disrupting the entire economic cycle. In the wake of demonetisation corporatesector faced major challenges due to inadequate cash flow. Slowdown in demand and stalledprojects made it difficult for borrowers to repay debt. Consequently the credit off-takedid not improve though huge capacities built up remain unutilized. As a result NPAs orbad loans of public sector banks (PSBs) reached unprecedented levels. With subdued creditgrowth asset quality issues increased provisioning requirement due to migration theprofitability of banks including your Bank has been impacted substantially.
Your Bank's focus during the year had been increasing credit with emphasis on retailand MSME segments reducing NPA and rationalizing of cost. Retail advances grew fromRs.12652 crore to Rs.13221 crore largely propelled by the encouraging growth in thehousing finance segment (19.18%). The MSE advances have grown from Rs.10682 crore toRs.11404 crore. Going forward your Bank's focus would continue to be on housing as well asother segments like retail lending. In respect of MSME advances your Bank shall identifypotential MSME hubs across the country to garner business. The Bank shall strive to reduceits dependence on large corporate advances which are risky capital consuming andunyielding. The gross NPA ratio showed an upward trend due to low credit off-take andaverage reduction maintaining last year's trend. Your
Bank has taken a steep target of net reduction of gross NPA by 10% from the presentlevel in 2017-18 through recovery and upgradation a sizeable portion of it from thewritten off accounts. This reduction in NPA coupled with the targeted credit portfolio ofclose to Rs.75000 crore in March 2018 is likely to bring down the gross NPA to a slightlymore acceptable level. The Bank through various austerity measures adopted by it couldreduce the operating expenses from Rs.2973 crore in 2015-16 to Rs.2561 crore in 2016-17.
On the capital front the Bank received tremendous support from its Promoter i.e.Government of India. It received Rs.1026 crore of capital support from the CentralGovernment during the financial year in two doses. The Bank on its own could raiseRs.127.49 crore via its maiden QIP issue. Further the Bank raised Additional Tier-1 orAT-1 Bonds to the tune of Rs.200 crore to augment its Tier-1 capital. With these the Bankpresently is sufficiently capitalized however it will keep on looking for opportunitiesto raise more capital from the market during the current year. The ultimate aim is to beself sufficient in terms of capital by March 2019 when the BASEL-III norms become fullyapplicable to the Bank.
Consequent to the infusion of capital by the Central Government your Bank is in theprocess of signing a Tripartite Memorandum of Understanding between Government of Indiathe Bank management and employees committing to a time-bound turnaround plan beginning FY2018 onwards with quantifiable milestones w.r.t. inter alia NPA Management strengtheningcredit arranging capital from market cost curtailment etc. to be monitored quarterly.
Performance highlights of 2016-17 of your Bank were -
Bank turned around from last years' loss of (Rs.281.95 crore) to report a NetProfit of Rs.219.51 crore.
The total business of the Bank reached Rs.197442 crore with deposits atRs.126939 crore and advances at Rs.70503 crore.
CASA deposits stood at 47.33% of total deposits one of the highest in theindustry;
Return on Assets was reported at 0.21% and Return on Equity at 4.38% compared tolast year's -0.22% and -6.01% respectively.
Capital adequacy under BASEL III norms improved from 10.08% to 11.14%.
Business per employee improved from Rs.12.37 crore in 2015-16 to Rs.13.04 crorein 2016-17 while Business per Branch improved from Rs.93.39 crore to Rs.96.17 croreduring the same period.
The major business initiatives of 2016-17 were -
Launch of United Affordable Housing Loan Scheme under Prime Minister Awas Yojanawith subsidy coverage for the Middle Income Group;
Launch of United Kaushal Rin Yojna for Vocational Education;
Introduction of Merchant Acquiring business;
Launch of Moments Card (Image Card) on the Rupay-Platinum platform;
Launch "Bihar Student Credit Card" to provide education loans tostudents who are residents of Bihar.
Sanction limit under Joint Liability Group Loan Scheme through BusinessCorrespondences crossed Rs.100cr.;
Upgrading and revamping all retail products to make them for competitive andattractive;
Strategies your Bank proposes to adopt for 2017-18 are -
Increasing credit portfolio with focus on retail and MSME sectors;
Re-launching products like LC backed bill discounting limit limit againstpledge of warehouse receipts in a modified form to augment credit portfolio;
Reduction of NPA through close monitoring aggressive recovery strictenforcement of SARFAESI Act accelerated One Time Settlements under renewed OTS Scheme ofthe Bank;
Cross selling of retail products
Mobilisation of low cost deposits and cost control without compromisingoperations and services;
During the year your Bank through its trust United Bank Socio Economic DevelopmentFoundation (UBSEDF) extended assistance to the tune of Rs.57.33 lac. in projectsassociated with Women Empowerment & Social upliftment Education Social Support &Development Health & Sanitation Drinking Water etc. Your Bank has so far set up 16RSETIs in the states of West Bengal (6) Assam (8) and Tripura (2) to impart training tothe potential entrepreneurs from the financially weaker sections and created 38 FinancialLiteracy Centre (FLCs) to extend financial literacy and credit counselling services to theunder-privileged section of the society. During the year the Bank adopted 13 villages forcomplete digitization under the aegis of its "U-Digigram" campaign.
The good works did not go unnoticed at the industry level as well. Your Bank wasshowered with awards and recognitions throughout the last year. While all awards areequally important to us to share a few names with you - the Bank was awarded the BestBank for Promotional Schemes - Winner Eco- Technology Savvy Bank Award- Runner Up(Emerging Category) Special Jury award for Turn Around Bank all by Chamber of IndianMicro Small and Medium Enterprises (CIMSME) Best Social Bank - Runner Up (Medium BankCategory) by ASSOCHAM awards for Best Bank under PMJDY and award for Best Bank in WestBengal under the category Highest Deposit accounts opened under PMJDY by Forum forInclusive Financial Services (FIFS).
I express my sincere gratitude to our Promoter i.e. Central Government the regulatorsi.e. the Reserve Bank of India Securities & Exchange Board of India the StockExchanges on which the Bank's shares are listed for their valuable guidance whenever itwas required Bank's employee for their perseverance sincerity and dedication and valuedcustomers and stakeholders for their unending support. Without these the turnaround wouldnot have been possible.
Lastly to sum it up in a positive note - we have almost reached the end of the tunnel.One last step forward and sublime brightness is beckoning us.
| ||Sd/ |
| ||Pawan Bajaj |
| ||Managing Director & CEO |
|Dated May 18 2017 Kolkata ||DIN:03291906 |