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State-owned UCO Bank said it has made provisions of 50% on a large corporate account that turned non-performing in Q2FY25, contributing to elevated slippages. While discussing the bank's provisions and slippages in an interview with CNBC-TV18, Ashwani Kumar, MD & CEO, revealed that with recoveries exceeding ₹900 crore, the bank expects slippages to normalise in the coming quarters and further provisions to be made in the normal course of business. On October 19, the bank reported a 50% year-on-year (YoY) increase in net profit , reaching ₹ 602 crore for the second quarter ending September 30, 2024.
In the same quarter of the previous fiscal, the bank had posted a net profit of ₹401.7 crore. The current market capitalisation of the company is ₹ 55,595.
21 crore. Below is the verbatim transcript of the interview. Q: If you could talk about your slippages — slippages up 80% quarter on quarter (QoQ) and now stand at ₹ 864 crore.
Is this what led to this increase? Some more color on which segments and what would be the slippages going forward for Q3 and Q4 where you would have some visibility, will it be at similar levels, or can we expect a moderation? A: To give you a flavour about the slippages during this quarter, in this quarter, we had one large corporate account, which turned NPA, having exposure of around ₹ 245 crore. That led to elevated slippages, plus some agriculture impact because, in the September quarter, agriculture slippages are a little bit on the higher side every year. So these are the two main reasons, which led to the slippage increase.
And one more thing the account, which led to slippage in the corporate segment, we have already provided 50% as a provision against that account. Going forward, I expect that the slippages will be in the normal range, which were there in the previous quarters, less than ₹ 500 crore. It will not be elevated to the level, which is seen in this quarter.
Q: You said you provided for 50% of the account that recently slipped into an NPA. But what about the remaining 50% when do you expect to provide that and part two of my question is there was a massive write-off as well during this quarter. Why have recoveries been on the lower side this time around? A: The remaining amount will be provided in the normal course of business, maybe in the next quarter and going forward.
And so far as the recoveries are concerned, we had total recoveries of more than ₹ 900 crore. Major recoveries were in the write-off accounts also. Also Read | MCX Q2 Results: Firm swings to black, posts ₹154 crore profit, revenue spikes 73% So total recoveries put together were more than ₹ 900 crore from the various accounts in this quarter, and the slippages were - one main account was there.
Going forward, we expect that the slippages we will contain and the recovery and upgradation will improve next quarter onwards. Q: Do you have a gross NPA number which you could end the year with? A: Our target is that we will be ending with less than ₹ 6,000 crore -gross NPA. This is the guidance we have given at the beginning of the year.
Q: What about the deposit growth? Because your CD ratio is fairly comfortable, 70% lower than many of your peers. What are you targeting by a way of advances growth and deposit growth for the current year? A: In the current year, we have given a guidance of 8-10% of deposit growth. And during this quarter, we clocked deposit growth of 10.
57%. Advances growth, we have achieved 18% — though the target we have targeted is 12-14% to achieve a CD ratio of 75% — with the deposit growth of 8-10% we will be able to achieve 75% of the CD ratio by this year-end, we are using our excess SLR securities to raise funds from the market so that once we achieve 75% then we will you have another round of deposit raising aggressive plans also. For more details, watch the accompanying video Catch all the latest updates from the stock market here.
