RSS Feed
Twitter
10:45 PM
Blogger
Kolkata-based UCO Bank, which had a smaller customer base among its peers, wants to focus on customer acquisition, to help in increasing the share of low-cost deposits. In an interview with Business Standard, Arun Kaul, chairman and managing director, who took charge three months before, discusses the strategies with Manojit Saha. Edited excerpts:
What areas do you want to focus?
I identified a few challenges when I took over the bank. First, I have noticed the current and savings account deposits (Casa) are radically low. Casa has been low as compared to other banks of the same size and there were two reasons.
One, customer acquisition was very slow. The customer base was also small as compared to peers. We had initiated certain customer acquisition programmes, the results of which are encouraging. We are now adding 200,000 customers every month, of which 50 per cent are in the savings account. The second is customer service. We are now putting lot of focus on this.
How will this impact your low-cost deposit share?
Our current accounts and savings, which are around 24 per cent of total deposits, are expected to be between 27-30 per cent over the next six to 12 months.
What about asset quality?
Asset quality was a concern. In the first half, we had slippages of more than Rs 1,000 crore. This also assures that there will be no
surprises, going ahead; there will only be normal slippages.
Any plans to sell some bad loans?
We are in the process of doing that. The first process will be completed in the next one or two weeks. The next process will start
immediately after that.
How much of NPA (non-performing assets) will you be putting on the blocks?
The first process involved Rs 280 crore and the second process will be Rs 300-400 crore. Before March 31, we will at least have two processes.
How much improvement will it have on gross NPA?
I will be very comfortable if the gross NPA comes below two per cent before March 31 (from 2.39 per cent as on September-end.)
The bank had plans for a follow-on public offer. Is that still on the cards?
We have received good support from the government. We have received Rs 673 crore this financial year. As a result, the capital adequacy ratio is comfortable, at 13.6 per cent. So, we are not having any plan for an FPO in the current financial year.
Your net interest margin in the second quarter was 3.51 per cent. Would you be able to hold on to that?
We may not be able to hold on to that because the shorter end of the yield curve has moved up. So, NIM can slightly go down. But we will still be above three per cent, hopefully.
What is your exposure to the micro finance sector?
Zero.
Where do you see the bank two years down the line?
I do see it emerging as a more powerful organization, with improved market share and profitability.
UCO Bank had earlier planned to foray into the insurance sector. What is the status?
We may not be able to do all ventures involving large capital till our balance sheet is fairly strong. In any case, we are doing the distribution part, both insurance and mutual fund. On manufacturing, we would like to wait till the time the bank becomes much healthier.
What areas do you want to focus?
I identified a few challenges when I took over the bank. First, I have noticed the current and savings account deposits (Casa) are radically low. Casa has been low as compared to other banks of the same size and there were two reasons.
One, customer acquisition was very slow. The customer base was also small as compared to peers. We had initiated certain customer acquisition programmes, the results of which are encouraging. We are now adding 200,000 customers every month, of which 50 per cent are in the savings account. The second is customer service. We are now putting lot of focus on this.
How will this impact your low-cost deposit share?
Our current accounts and savings, which are around 24 per cent of total deposits, are expected to be between 27-30 per cent over the next six to 12 months.
What about asset quality?
Asset quality was a concern. In the first half, we had slippages of more than Rs 1,000 crore. This also assures that there will be no
surprises, going ahead; there will only be normal slippages.
Any plans to sell some bad loans?
We are in the process of doing that. The first process will be completed in the next one or two weeks. The next process will start
immediately after that.
How much of NPA (non-performing assets) will you be putting on the blocks?
The first process involved Rs 280 crore and the second process will be Rs 300-400 crore. Before March 31, we will at least have two processes.
How much improvement will it have on gross NPA?
I will be very comfortable if the gross NPA comes below two per cent before March 31 (from 2.39 per cent as on September-end.)
The bank had plans for a follow-on public offer. Is that still on the cards?
We have received good support from the government. We have received Rs 673 crore this financial year. As a result, the capital adequacy ratio is comfortable, at 13.6 per cent. So, we are not having any plan for an FPO in the current financial year.
Your net interest margin in the second quarter was 3.51 per cent. Would you be able to hold on to that?
We may not be able to hold on to that because the shorter end of the yield curve has moved up. So, NIM can slightly go down. But we will still be above three per cent, hopefully.
What is your exposure to the micro finance sector?
Zero.
Where do you see the bank two years down the line?
I do see it emerging as a more powerful organization, with improved market share and profitability.
UCO Bank had earlier planned to foray into the insurance sector. What is the status?
We may not be able to do all ventures involving large capital till our balance sheet is fairly strong. In any case, we are doing the distribution part, both insurance and mutual fund. On manufacturing, we would like to wait till the time the bank becomes much healthier.
0 comments:
Post a Comment