On track to exceed NPA recoveries target of Rs 3,000 crore: Uco Bank MD

In this quarter, we have achieved recoveries to the tune of Rs 1,064 crore, contributing to over Rs 2,700 crore in recoveries across the past three quarters, said UCO Bank MD and CEO Ashwani Kumar

The Uco Bank is following a balanced approach to achieve steady growth in its lending portfolio on the retail, agriculture, MSME (RAM) and the corporate side. In a telephonic interview, Uco Bank Managing Director and Chief Executive Officer Ashwani Kumar told Harsh Kumar that the state-owned lender has achieved recoveries worth Rs 1,064 crore in the December quarter. Edited excerpts:

 

What is the recovery outlook for Uco Bank in FY25?

 

In this quarter, we have achieved recoveries to the tune of Rs 1,064 crore, contributing to over Rs 2,700 crore in recoveries across the past three quarters. Our target for the (current) financial year is Rs 3,000 crore, and are on track to exceed this guidance. Initially, we expected around Rs 800 crore in recoveries for this quarter. We surpassed that figure, with some recoveries occurring earlier than anticipated. We are optimistic about achieving total recoveries of approximately Rs 3,200 to 3,400 crore by the end of the year. We are actively working on various accounts and believe we can recover an additional Rs 500 to Rs 700 crore in the upcoming quarter. The majority of this quarter's recoveries have come from the infrastructure sector, particularly from older non-performing assets (NPAs), many of which were already fully provided for and technically written off.

 

Vehicle loans in the retail segment have gone up. What’s your strategy?

 

In 2024-25 (so far), our vehicles loan segment has grown at 51.93 per cent on a year-on-year (Y-o-Y) basis. We have revamped our vehicle loan scheme to offer competitive interest rates and enhanced product features tailored to the market. To extend our reach, we've partnered with dealers across the country. Our marketing teams and zonal offices have played a crucial role in this initiative. A key factor in our success has been our commitment to timely delivery. We ensure that loan approvals meet dealer requirements within stipulated timelines, enabling a seamless experience. As a result, we’ve seen an increase in leads at our branches for vehicle loan sanctions under the revamped scheme.

 

What will be your approach towards retail, agriculture and MSME (RAM) and the corporate side?

 

For the upcoming year, our focus will remain balanced between retail and corporate segments. At the start of the year, we established a target ratio of 61:39 or 62:38 for RAM and corporate loans, and we plan to maintain this mix moving forward. We aim to grow across all areas of RAM, including housing, vehicle loans, agriculture, and MSMEs, while expanding our corporate offerings. Over the past five to six quarters, we have experienced consistent growth across segments. This balanced approach has allowed us to achieve steady growth.

 

Your cost of funds has declined. What does it signify?

 

The cost of funds has declined, which is a positive indicator of our financial health. It encompasses the resources we raise, including deposits and market funding. Despite persistently high interest rates and elevated deposit rates, we've managed to reduce cost of funds from 4.79 to 4.75 per cent.

 

This decrease, combined with an improvement in our yield on advances by over 10 basis points, has resulted in an increase in our net interest margin (NIM) from 3.10 to 3.17 per cent this quarter. Over the past year, our NIM has improved from 2.8 per cent to 2.9 per cent. While we have seen a decline in our yield on domestic investments from 6.89 per cent to 6.7 per cent, we have capitalised on investment opportunities through strategic churning. This included selling securities at higher rates and purchasing new ones at lower rates, which allowed us to book profits. Our treasury profits have increased, reaching Rs 145 crore this quarter, compared to a loss of Rs 24 crore in the same period last year.

 

How are you working on the digital front?

 

Under Project Parivartan, we are redefining our physical processes by transitioning to digital journeys through our mobile and internet banking platforms. Our primary goal is to digitise at least 25 customer journeys related to both assets and liabilities. So far, we have successfully digitised nine journeys. Notably, in response to the Finance Minister's recent budget announcement, we have launched a cash flow-based lending solution for MSMEs, offering loans up to Rs 25 lakh. Additionally, we introduced the GST Smart Finance scheme, allowing customers who pay GST to access self-service loans based on their GST returns and other relevant data—all with just a few clicks from the comfort of their homes. Customers with salary accounts can access pre-qualified personal loans digitally in just a few clicks as well. Currently, we are working on digitising our housing and vehicle loan journeys, among others. Our goal is to continually expand our offerings, launching new digital journeys every month to enhance our customer experience.