UBI reports Rs 1,531 cr loss as NPAs spike;warns of more pains

Union Bank of India today reported a net loss of Rs 1,531 crore for the September quarter due to steep rise in bad loans and the state-run lender has made full provisions for the 11 accounts referred to NCLT in the period.
The bank had reported a profit after tax Rs 177 crore in the year-ago period.
The bank also warned of more pains in the next two quarters as it will have make the entire provisions for the second RBI list of 28 accounts referred to the NCLT of which the bank has exposure to 18 accounts.
"We have made an additional upfront provisioning of Rs 1,566 crore for the 11 accounts referred under the NCLT. With that, our loss for this quarter is Rs 1,531 crore," managing director and chief executive Rajkiran Rai G told reporters.

The Reserve Bank had asked banks to spread the provision for the 12 large stressed accounts, which are referred to the NCLT, over three quarters till March 2018. Had the bank taken one-third of the provisions, losses could have been Rs 500 crore in the quarter, Rai said.
From the second list of 28 large stressed accounts which RBI has banks to resolve before December 13, the bank has exposure to 18 accounts.

"For the second list of accounts we are required to make an additional provision of 1,087 crore. It will come in the December and March quarters. This is going to hit us in the next two quarters," Rai said.

Global NIM stood at 2.08 per cent as against 2.30 per cent in the year-ago period, while domestic NIM stood at 2.19 per cent as against 2.43 per cent last year.
"The margins have contracted as we are on the downward interest rate cycle. When you are in the downward interest rate cycle, the cost of deposits will not come that fast. Yields on advances will come down very substantially because of the MCLR reduction. So, there is a time lag before we reduce our deposits cost," Rai said.
Gross non-performing assets stood at 12.35 per cent from 10.73 per cent while net NPAs were at 6.70 per cent as against 6.39 per cent.

Slippages in the quarter reduced to Rs 2,686 crore from Rs 3,396 crore last year same period.
The bank recovered Rs 484 crore of loans in the quarter while upgraded Rs 92 crore of loans.
The lender has set a recovery target of Rs 4,000 crore for this quarter of which, it had recovered Rs 1,000 crore of loans.
On divergence in NPA recognition, Rai said though RBI has completed the audit, he cannot disclose it as the bank is still under discussion with the regulator.
Rai expects bank to turn black in the last quarter of this fiscal on the back of improvement in recoveries and resolutions.

Total deposit of the bank grew 6.8 per cent to Rs 3,86,025 as of end September from Rs 3,61,454 crore last year.
Rai said the bank's capital requirement is Rs 4,000 crore for the year. It has already received board to raise Rs 2,000 through QIP, public issue or private placement.
The bank's scrip ended 1.43 per cent up at Rs 173.30 on the BSE which closed at 33,685.56, up 0.33 per cent.