Union Bank of India (UNIONBANK) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Union Bank of India Earnings Conference Call for the period ended March 2021. The bank is represented by the Managing Director and CEO, Shri Rajkiran Rai G; Executive Director, Shri Gopal Singh Gusain; Shri Dineshkumar Garg; Shri Manas Ranjan Biswal; Shri Nitesh Ranjan and other members of the top management. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mrs. Ranjita Suresh, Assistant General Manager, Investor Relations. Thank you, and over to you, ma'am.

Good evening, everyone. The structure of the con call shall include a brief opening statement by MD and CEO, and then the floor will open for interaction. Before getting into the con call, I'll read out the usual disclaimer statement. I would like to submit that certain statements that may be discussed during the investor interaction may be forward-looking statements based on the current expectations. These statements involve a number of risks, uncertainties and other factors that cause the actual results to differ from the statements. Investors are therefore requested to check the information independently before making any investment or other decisions. You're also aware that Andhra Bank and Corporation Bank were amalgamated into Union Bank of India with effect from 1st April 2020. Accordingly, financials have been disclosed to the stock exchanges. However, to facilitate our investor community to have like-to-like comparison, the investor presentation is based on aggregating the audited or reviewed numbers of 3 banks for March '20 and do not entail any adjustments. With this, I now request our MD and CEO for his opening remarks. Thank you. Over to you, sir.

Good evening, everyone. It is pleasure and privilege to meet you all for Union Bank of India financial results for the quarter and financial year ended 31st March 2021. It was a year like no other. The financial year began under clouds of uncertainty about the scale of contagion and longevity of the COVID-19. Just when it seemed India had conquered the virus and restored normalcy, virus came back with even greater force, overwhelming our resources. However, it could not break our will to fight and bounce back. Despite challenges, our banking industry has worked seamlessly to serve India. We also had the challenge of affecting amalgamation this year. Products and process harmonizations are completed earlier to offer basic services from day 1 of amalgamation. Our technology platforms were integrated within record time of 10 months for customers to have common digital banking platforms. Payment systems integration is complete. Our organization structure is rigid to make it attractive for large network and business mix post the amalgamation. More satisfyingly, our human resources have come together, sharing a common vision of becoming the most preferred bank of New India. We have unlocked synergy benefits in the very first year of amalgamation. Coming to the business and financials of the year ended 31st March 2021. The operating profit of the bank grew 6.54% Y-o-Y and stood at INR 19,259 crores for financial year 2020-'21. Net interest income registered a growth of 4.37% Y-o-Y and stood at INR 24,688 crores during the year 2020-'21. The global net interest margin, NIM, stood at 2.7% for the year 2020-'21. The net profit stood at INR 2,906 crores for the year against a net loss of INR 6,613 crores in the previous year. In terms of business, the RAM sector noted 8.4% Y-o-Y growth, raising its share in domestic loan book to 57.7%. Within RAM sector, the retail advances grew 10.5% Y-o-Y. Agriculture advances grew by 11.9% Y-o-Y. Of liabilities, total deposits grew 6.4% Y-o-Y to INR 9,23,805 crores as of March 31, 2021. The CASA ratio stood at 36.3% as of 31st March 2021 compared to 34.1% of previous year. Speaking of asset quality, the gross NPA ratio stood at 13.7% as of March '21. Our restructured loan book, inclusive of cases implemented and those estimated to undergo restructuring before 30th June is roughly 1.3% of the loan book. Our SMA-2 numbers are roughly 0.6% of the loan book. All 3 together, the stress book is about 2.15% of the loan book. On capital front, the bank raised INR 2,000 crores of Tier 2 capital and INR 1,705 crores of AT1 capital during 2021. Bank's operating profit will be sufficient for any provision requirements going forward. The capital raising will be only for growth purposes. Accordingly, we successfully raised INR 1,447 crores of equity capital during the current quarter of this financial year by way of QIP. Friends, a number of initiatives are underway, both as a part of our long-term strategy and as per the EASE Reforms agenda, covering all around digitization and customer convenience. Union Bank secured third rank in Q3 of financial year 2021 in EASE agenda, with an overall score of 73.5%, registering an impressive growth of 38% over the last -- Q4 of '19-'20. The bank recorded highest absolute growth among all public sector banks or baseline, affirming all around improvements in the bank. The bank has a lot of value unlocking left in its subsidiaries. These subsidiaries carry a wide range of activities in asset management, capital markets, insurance, marketing and distribution, among others. We have been nurturing them, and we'll take a call on taking this to market at appropriate time. We have already initiated process of offloading a 30% stake in IndiaFirst Life Insurance. It is expected to fetch good value. Our other subsidiaries and joint ventures are well-established players today. There's a brief on this given in the analyst presentation, which you can take into account while analyzing the value potential going forward. The economy has been resilient despite successive waves of COVID disrupting businesses. With vaccination in progress, we can look forward to double-digit growth this year. We are ready to help our clients recover and realize their goals faster. Let me conclude by sharing our guidance for the year '21-'22: deposit and advances growth in the range of 8% to 10%; CASA ratio in the range of 36% to 37%; NIM to be around 2.9% to 3%; credit cost to be around 2%; delinquency ratio to be in the range of 2.5. With this guidance, I conclude my remarks. We are grateful to the analyst and investment fraternity for their support and feedback that helps us take informed decision in our journey towards efficiency and profitability. I look forward to your questions. Thank you.

[Operator Instructions] The first question is from the line of Mahrukh Adajania from Elara.

So see my first question..

[Operator Instructions]

Can you hear me?

Yes, go ahead.

Now it is better, ma'am. Yes.

Yes, sir. Sir, my first question is what is the collection efficiency in April, May versus March?

Actually, we have not shared the collection efficiency numbers for April and May. Our collection efficiency of March was...

85%.

85%. So the impact is about 2%, 3% in April and May, but then we are not given the final number. So we will share it in June only.

Yes, sir. And any guidance on how much restructuring you will do in MSME and retail under OTR 2.0 ?

No, ma'am. Actually, we have not assessed that because it is in a very, very preliminary stage. The branches are connected to the customers and assessing. So people are also waiting for the opening up, which is happening in June. So we may be able to estimate the number by June end or maybe July. Right now, we'll not be able to put out any number.

And sir, how much [ of assets ] are outlined to be transferred? Have you earmarked for transfer to the right bank?

Anyway, now since we have shared the numbers, so like there are 17 accounts in our bank, about INR 7,800 crores, which, in the first 2 phase, is identified for fit to be transferred to the National Asset Reconstruction Company. But then a rider here, because this call has to be taken by the ARC, not by the bank. Because once the ARC shows the interest in buying this asset, then only it can be transferred there. So -- but then it's a preliminary estimate that this much, like in the first list, is like INR 7,800 crores, 17 accounts are marked to be offered to the ARC.

Okay, sir. And are these -- would you be able to give a breakdown on how much of this is fully written off and how much is not?

That -- I can say that it is fully provided. So we don't share that out of that how many is written up because it doesn't make any difference. Actually, so when the write-back comes, either it comes as a recurring NPA or it is recovering return of account. So it will be difficult to give that number.

Okay. And sir, my last question is what are the interest reversals during the quarter?

Interest reversal was INR 1,260 crores.

Okay. And last quarter, you had provided how much sort of pro forma NPLs in provision.

That number I'll share with you. And actually, see, there are 2 numbers, actually, because that is not mixed up. Reversal of interest for INR 1,260 crores. Then there was 1 more item called compounding interest, interest on interest, that was INR 127 crores. Let us not -- that is separate, where we gave the credit back to the customer. That INR 1,260 crores was the -- because the NPA was not officially recognized till December, when the NPA was marked in the month of, like March, so INR 1,260 crores of interest, which is not collected, got reversed, which will have an impact on our NIM and net interest income for that particular quarter. That's why we have tried to compare year-on-year because Q4 numbers may not be depicting the correct situation. So the provision we held for interest reversal was -- this is right, INR 1,535 crores? We have INR 1,535 crores. That was the provision?

It was around INR 350 crores.

Yes. INR 350 crores, this for the NP?

INR 250 crores.

We had only INR 250 crores of provision for interest reversal. But actual reversal happened around INR 1,260 crores.

Okay. Sir, and just 1 very final question, what is the recovery from Bhushan?

Bhushan recovery was...

INR 1,450 crores, yes.

INR 1,450 crores.

[Operator Instructions] The next question is from the line of Jai Mundhra from B&K Securities.

Sir, first question is on your MSME slippages. So out of the INR 17,000 crore, the highest number is from MSME and where at least the situation is still volatile. So when you say 2% kind of your slippages -- sorry, 2.5% of slippages, are you seeing the similar kind of MSME slippages? Or because 2.5% would mean there are improvement in the slippages year-on-year, right? So yes, so that is the question, sir. Where do you think that the improvement will come from?

Yes. See, we expect the MSME slippages should be at least 10% to 15% less than what happened last year. Because -- so last year, the MSME book was already under stress when the COVID started. So naturally, COVID further compounded the problem. So we have seen a slippage. And slightly, the amalgamation also compounded problem in recognition and other things because we were going through a massive amalgamation process in the first 6, 7 months. So all put together, we saw a higher slippage in MSME. So -- but then I don't think that number will repeat. So our numbers for this year, it is at least 15% less than last year's slippage for MSME.

Understood, sir. And second question is, sir, on your SMA, right? So the number that we have shared is for '20 reporting above INR 5 crores. But even if you see your difficult construct this year, it looks like a 70%, 75% has come from below INR 5 crore number. And maybe situation would have worsened from March. So any broad number, sir, that you can give for the SMA-2 number for the entire bank, including below INR 5 crores exposure.

I'll leave that question to Nitesh.

Okay. So I think current number is around 2.4% of the book, which, compared to Q3 when we shared, it was around 3% SMA-2 full book.

SMA-2, including below INR 5 crores exposure is?

All accounts.

Yes. Okay. That is a very, very good number, sir, if I were to compare versus across banks. So 2.4% is a very good number, okay. And the last thing, sir, sorry, second last thing, what is the outstanding DTA that we have in our book? Because we have not moved to the new tech regime. And the last is the recovery which you performed in NCLT, non-NCLT, business as usual, et cetera, what could be the total upgrade recovery? And maybe if you have the number, corresponding number, that would be the reduction in the total GNPA?

Recovery, Nitesh will share later. On the DTA, I think our DTA is around 15,000?

INR 15,700 crores.

INR 15,700 crores is our DTA. So okay. On the recovery side, I'll ask Ashok Chandra. What we can do, this year, recovery number from NCLT, non-NCLT and next year, expected number you can share.

Yes. This year, total recovery, which we have made, is INR 10,800 crores. And in that, around INR 4,500 crores has come from the NCLT and remaining is from the non-NCLT. Going forward, we are expecting around INR 13,000 crores of recovery in '21, '22. And in that, we are expecting around INR 4,000 crores from NCLT and INR 9,000 crores from non-NCLT.

Understood. So this is the upgrade recovery, right, not the reduction?

No, I'm talking about the same. The cash recovery plus upgradation.

[ You can ask ] 1 minute, yes? Actually, there is a recovery from written-off accounts. Then we like -- when we view that tallying numbers for NPA.

If that is okay, I think you can include [ best guess numbers ], sir.

Okay.

The next question is from the line of [indiscernible] from Global Capital.

Sir, my question was on other income part. So if I see your consol and the stand-alone numbers, there are roughly a difference of around INR 2,500 crores. So I just wanted to know like what accounts for this income and the nature of this income?

Yes. Maybe if you are looking at only Q4, that will be the recovery from write-off account because we had recovery from write off, that was about INR 1,900 crores.

INR 1,900 crores. He was talking about stand-alone and consol, actually because that was different. You are talking about the stand-alone?

Sir, I'm talking about stand-alone and consol. The recovery, I believe, is already there stand-alone that you have given in the presentation.

Okay, we will report on this.

We will -- yes, clearly, I think maybe we may have to clarify. We don't see that much of a difference.

We have -- like within income [indiscernible].

Then again...

Stand-alone number of Union Bank and the consolidated with JV in there. We'll report on this. We can...

[Operator Instructions] The next question is from the line of [ Parekh ] from Reliance General Insurance.

Sir, I would like, do we have any COVID provisions? Or have we utilized the COVID provisions made earlier?

Yes. During Q4, actually, the provision what we carried on standard assets as of Q3 because we made provision on the pro forma NP so that was utilized during Q4. So -- but still, we carry a provision of roughly INR 1,200 crores on the standard asset. They are mostly on the restructured book, and maybe some of the anticipated provision requirement. We still carry some provision. But most of that provision, what we made in Q3, we used during Q4.

[Operator Instructions] The next question is from the line of [indiscernible], an individual investor.

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[Foreign Language] Going forward also, it is going to come off. [Foreign Language]

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[Operator Instructions] The next question is from the line of Sohail Halai from Antique Stock Broking.

Yes. Sir, just wanted to understand, in terms of this ECLGS, how much have we disbursed? And second, has there been NPAs after ECLGS disbursements?

Amount of ECLGS, I'll give you. I think the sanctions are INR 9,000...

9,700.

Sanctions are INR 9,700 crores and the disbursement is INR 8,700 crores. So like since this is a fresh loan, we are not -- we are yet to see any NPA in these accounts. We are not seeing any NPA as of now.

And sir, do you think a possibility of these loans, where the ECLGS have already been given, that will also get probably restructured at additional 10% guarantee amount would be given to them. Your view on basically in terms of how this ECLGS funding would shape up going ahead as well?

That we need to actually see. These schemes are just announced. After the approvals and all that, we have put out this scheme. We are just assessing. Because last year, we had assessed the restructuring book can be as high as 4% or so. But ultimately, it turned out that it is not even half of that. So because the customer behavior is very difficult to predict so difficult to put a number. But then, yes, some of the restructuring can happen, people will definitely avail the additional 10%. Some restructuring will happen, but very difficult to put a number into it. But looking at the behavior last time, it may not be a very big number.

Okay. But some of the ECLGS that people have taken may also find their way in terms of restructuring. And sir, they would be eligible for this 10% of additional financing as well under the new guidelines, or another new scheme, right?

Definitely. They will be eligible and like they can be restructured also. Because like if the moratorium period given is less than 24 months, so now they can avail of full 24 months. So that permission RBI has given.

Okay. And sir, second, just connected to this is SME restructured so far. So they are not allowed to be restructured second time, right? So they could potentially slip into NPLs?

Yes, the MSMEs and other accounts restructured in the last year. So because we have given them moratorium and all that, immediately, we don't foresee that they would slip, actually. But then, it really, again, depends on how quickly they can come back, whether you have a third wave, whether, again, lockdown will happen, see, so many things. So difficult to predict on the customer behavior or how the economy behaves. Because most of this -- actually, what we have done in the last restructuring also, we have not done restructuring of unvariable units and other things. So you would have seen the numbers. We are very careful. We recognize this NPA rather than restructuring and delaying the [ game ]. So we have gone for aggressive recognition and classifying it as NPA. So whatever we have restructured, we are very clear that they are very variable units. So we will not like -- it's hard to guess at this point of time what will happen. So there can be NPAs out of this, but then may not be much.

Okay. Sir, and if you could just speak about the recovery as well and especially in terms of DHFL recovery, when do you expect and how much do you expect?

See, DHFL, like our expected recovery is roughly INR 600 crores plus INR 900 crores, up to INR 600 crores is the cash recovery, another INR 900 crores the NCDs or other bonds, which we expected. So these are number for us. So it's a fully provided account. So naturally, this is the write-back we'll be getting. So according to me, if everything goes right, we should see it before September.

Okay. And sir, final question on this asset sale on the other national level. Just wanted to understand a couple of parts. One is basically 15% would be in cash and 85% would be in security receipts. Suppose you have written off an account, whether this security receives money would be also accounted in a recovery of a written off? Or the security received would be marked to INR 1?

Actually, since they are fully provided accounts, so there will not be any additional provisioning requirement for the SRs. That's one thing. So because that provision will get transferred to the SR, even if we have to mark it to INR 1. But then the -- since these SRs are backed by the government or in guarantee, so that treatment, like whether I can write-back that much provision, is something which we have to wait for the regulator's decision. At this point of time, it will be difficult to predict that. But if they give the cushion because it is guaranteed by the government, so that the SRs, to that extent, I can write-back the provision if the regulator permits. Otherwise, yes, these SRs, I can carry the provision what I'm already holding. But then these SRs will be tradable also. We will try to create a market because they are sobering back. So if I'm able to sell these SRs, definitely, I can book that profit.

Sir, just to be clear on this, I suppose exposure on a return of account is INR 100 and the recovery is INR 30. So you will get somewhere around INR 25 at least at security receipts. So now there is no clarity yet, whether this will boost your P&L or whether this will be marked to INR 1. This would depend upon RBI's regulations, right? Am I right on this?

Yes. So just to clarify, the -- like issuing of SR will not entail any further provision because it's already provided. So that is one part. Second, if the regulator permits the write-back of provision, that will be a benefit to the P&L. That will accrete to our P&L. There are one more source is sale of this SRs.

Okay, okay, okay. So there would be a trading market that could be created because of the government backing. And after selling these SRs, you could actually show it in your P&L as well.

Right.

All right. And sir, finally, in terms of -- if I look at the margins, so what is your sense in terms of the margins going into FY '22 and '23? So I understand and appreciate that this year, again, because of the interest income reversal, the fourth quarter margins was actually low. But on a steady-state basis, how are you looking at the pricing of the loans and, consequently, what is the kind of risk that you are ready to take on your books?

I think the net interest margin came around 2.71%, if you look at the full year. So we are projecting 2.9% to 3% NIM for the current year. So the -- actually, our estimates are that the interest rates are going to be very stable during this year. I don't see any price cuts and all that. I think the deposit rates also will remain steady and MCLRs also will remain steady. Now it is basically the pricing part. So right now, on the short-term loans of all public sector and other big private sector, there is huge competition because there is so much of liquidity and the demand is low. So banks are competing with each other to grow the loan book by offering very low interest rates. The pricing power at this point of time is missing. So -- but then unless the liquidity is [ stuffed ] out of the system, this competition will continue. But then when we are projecting our improvement in net interest margin because we are having a lot of infrastructure funding, particularly the term loan proposals. And as a large bank, there is some pricing power. We are gradually improving our pricing. Plus on the retail side, we are shifting to products which are like a higher margin, like vehicle loans and others. So with that, we are planning that we can reach around 2.9% to 3%. But otherwise, interest rate is going to be very stable this year. Short-term market, I don't think banks will have the pricing power for the next 7, 8 months.

Sure. Sir, and finally, if you could actually just guide in terms of any internal estimates of the ROAs that you have for the next couple of years?

Yes, I'll ask Nitesh to share that.

I think for this year, we have given a guidance of around 20 basis points, against which we have reported around 27 basis points of ROA. For next year, our guidance is somewhere between 40 to 50 basis points. And you'll see that in terms of our operating profit run rate, we have already reached around INR 500 crores of operating profit per quarter. And as Raj said in the beginning, we are looking this year around 8% to 10% of advances growth. So that means that income will come from that. Then a couple of points I'll also add. In terms of NIM, NIM will increase 1 through the -- you can see there is a steady increase in CASA ratio. And also, that most of the -- this year, if you assume that interest rates remain stable. So most of the advances have already been repriced at the lower rate. However, the repricing of deposits will still happen, which will come from maturities. So that is the advantage we'll get. On top of that, as we said in the opening statement, we are looking at divesting our stake of 30% in IndiaFirst Life Insurance Company. So that is another income which will come. And then on the credit cost, this year's credit cost will be lower due to the lower hedging provision, lower delinquency-related provision that we are looking at and also something benefit that can come due to the transfer of assets to NARCL. So altogether, we are looking at around 40 to 50 basis points of ROA this year. And moving forward, in FY '23, somewhere between 0.75 to 0.8 ROA on [ contango ].

The next question is from the line of Abhijeet from Kotak Securities.

Sir, looking at the slippages breakup for the full year FY '21, there is a INR 5,700 crores slippages from the large corporate segment. If you could elaborate what has driven that?

Out of that, about INR 3,000 crores is already upgraded because these were OTR cases under restructuring. Because there is no protection, they slipped in March. But then before June, like they are restructured, and they are already upgraded during this quarter. So those were like -- they -- out of INR 3,000 crores, yes?

Yes, INR 3,000 crores is already upgraded.

INR 3,000 crores is already upgraded out of this INR 5,711 crores. So on the corporate side, we didn't see much -- it is only OTR cases.

Sir, this upgrade is -- is it part of the Slide 41, where you've given the estimated implementation number on corporate restructuring?

No, no. That is actually the remaining corporate accounts post March, which will be restructured. The remaining, out of that, something has happened in May and other things before 30th June, that is the number we shared. So to give you color to the total restructured book from the OTR 1.0 RBI scheme, so we have given that because some spillover was there. Because the scheme was there up to June 30, so naturally, some corporate accounts are getting restructured in the Q1. So to give clarity, I give on that. What I'm saying is the NPA slippage from the corporate book, which was INR 5,711 crores as of March. From that book, actually, about INR 3,000 crores of accounts which slipped, they were under onetime restructuring. The restructuring is complete, and they got upgraded in the Q1 of this year.

So that INR 3,665 crores of corporate loans, we should add INR 3,000 crores from the NPA line, which will get upgraded.

No, don't mix up that, because that will be under restructuring. That INR 3,600 crores, which is happening during these 3 months, they will get added to the total restructuring book of INR 6,000-odd crores, which is already completed as of 31st March. If you look at retail, MSME and corporate, which has happened up to March, that adds up to about INR 6,000-odd crores. The remaining INR 3,600 crores is happening before June. The total book will be -- total restructured book will be INR 10,000, crores, and all the INR 10,000 crores will be standard.

Just to add here, the -- on Slide 41, INR 3,665 crores that you are noticing, that are due for implementation this quarter. Out of that, INR 2,000 crores had slipped in Q4, which is now upgraded due to the OTR implementation. Is that clear?

Got it. Yes. And sir, there is 1 slide on Mudra loans. Slide 19. So that -- the total loans under Mudra scheme is around almost INR 19,000 crores. There is a number of INR 6,737 crores. That's the number for last year, is it?

Correct?

Yes.

Okay. So it's almost grown 3x over the last 1 year?

No, no, no. The first slide is the disbursement. The first part is the disbursement during this year, and the second part is outstanding.

Yes, yes.

Okay. Okay. Understood. Understood. So INR 18,000 crores, this gets included in the retail segment or the MSME segment?

It will be mostly in MSME.

And what would be the NPAs just on the Mudra book?

Mudra is around 11 point...

11.79%.

11.79%.

And it has gone up this year or not?

It has gone up slightly. So like I don't have the last year number. Definitely, it has gone up, but it is 11.79%, much below the normal MSME slippages.

Got it. Got it. And the last one was, what is the share of repo-linked loans in the overall loan book?

Share of repo.

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But then that number we'll share actually...

15%.

Now it is 15%? It is 15%.

The next question is from the line of Ashok Ajmera from Ajcon Global Services.

First of all, compliments for, sir, coming out with good set of numbers, even for this difficult quarter also, Q4, though there was a pressure, and most of the other banks could not meet this pressure and have gone into the losses. Having said this, sir, most of the questions have already been answered in such a long discussion. I have got a few data points and some clarification.

Yes, sir.

Sir, in case of the sector-wise, if you see your loan portfolio, in textiles, there has been an increase in this quarter of INR 4,700 crores. Is it 1 or 2 large companies? Or they are collectively the advantage in the whole sector, textile sector?

The textile sector, I may not have that breakup, no. But these are the normal, this year, making processes, and there will be increasing...

No, no. Because we see, if you compare with the overall growth, sector-wise, there is hardly any growth in -- except NBFC and textile, there's no growth in any other -- the same. So I was just wondering that -- is it a large account or? But anyway, if you don't have the numbers right now...

Yes. We'll look at it. Yes.

And this increase, similarly, in NBFC of around INR 1,700 crores and housing finance of INR 2,800 crores, they are all, I suppose, the AA+ rated companies?

Yes. That breakup we have given in one of the presentation, actually, how is our NBFC book, and these are all top-rated accounts, where we are increasing selectively our exposure so like other...

Sectors.

Yes.

So sir, if you look at the -- this treasury, treasury income in this quarter has been INR 934 crores as compared to INR 1,454 crores in the last quarter. But there is a profit on sale of investment also, which has also gone down. So any specific reason for treasury? Because, otherwise, there was no impact in any other bank of this magnitude. So is there a change in the policy or change in the matter of booking this income?

Treasury, actually, there is a regular activity depending on the call of the treasury. They book profits because, generally, like it is a interest rate function actually. So third quarter, like the situation would have been better to book profit, they would have booked actually. So like I have no comment here because the treasury function is basically when they see profits and the market is, well, congenial, they book both profits. So these fluctuations, maybe Q3 was slightly higher.

Yes, it was almost about INR 2,800 crores.

Q4 was -- Q3 was higher, higher than normal. Maybe they sensed the better opportunity because treasury is more of a more independent listing. So looking at the opportunities, they encash. Q4 is more of a normal number. I think if you look at all quarters, this is a normal number you'll see. Q3 was a higher number.

The recovering return of account is very good, INR 1,961 crore. There is one ahead of others, INR 134 crores. What is that in recovery in others, INR 134 crores, which has come only in this quarter?

ARC sales.

ARC sales.

Last quarter, we recovered that much amount.

Can you repeat it, please?

It is the ARC sale.

ARC sales.

Sales to ARC.

Okay, sales to ARC. This is what only -- I was wondering. Sir, anyway note #22, there is an additional provision of INR 750 crores on account of the delayed implementation of the accounts under resolution. What is the total outstanding of those loan accounts? And how many such accounts on which the provision of INR 250 crores is made?

Total 9 accounts, which include [indiscernible] outstanding is how much...

Sir, sorry to interrupt you, you are sounding very distant from the phone.

Just a minute, yes?

No, my sound is okay. I could not hear the company.

Actually, our people are discussing. Just a minute I'll come -- actually, we are just trying -- for what purpose?

[indiscernible]

Resolution was to be implemented. It's not done in time.

The delayed -- so [indiscernible] deadline?

[indiscernible]

Yes. So there was a delay in the implementation of a resolution plan in a few cases, for that extra provision has been stipulated.

I just wanted how many number of accounts and what is the amount of those total outstanding account in those accounts?

We'll share this separately.

We'll share with you separately.

That number for the account [indiscernible].

Yes.

And sir, this COVID loan -- special COVID loan, this extension by RBI at repo rate of INR 50,000 crore was announced. I believe our bank has also made the policy under this particular scheme. So do you have any data that how much under this -- our loan book is under this COVID loan? How much sanctioned and how much is disbursed? And are we positive about it in future?

Definitely, we are positive. The products are all given now to the field. But then it is too early to share the numbers because it's very early stages, because the product is there and the branches are already canvasing. Actually, we are reaching out. So we are very positive. We are likely to build a good book on this, but then too early days for putting a number into this.

Sir, will you consider it to route it through the NBFC for onward lending to the medical field?

No. At this point of time, that consideration is not in front of us. We are looking at only direct lending at this point of time.

Okay, sir. I have 1 more question, sir, that this interest deferral from March to August, which were there, which was converted into FITL, which was to be paid before 31st March 2021. Do you have the number that -- whether it has been paid on time by everyone? Or was there any slippage on that also? Any...

Yes, only INR 58 crores is pending in the FITL. All other was paid. All other FITL was paid.

Rest of all was...

Yes.

Got it. And sir, this recovery, which I referred just now, in that Bhushan, is it INR 1,600 crores and INR 961 crores, that Bhushan recovery is included in this recovery on INR 1,450 crores?

Yes. INR 1,450 crores Bhushan is included in the total write-off recovery of INR 1,900 crores for the contract.

Yes. So the recovery, otherwise, rest other than Bhushan, is only around INR 500 crores?

Yes.

Sir, one point which you discussed earlier about that National Asset Recovery (sic) [ Reconstruction] Company, NARCL. On that, you were giving like example of this, you have got about INR 7,800 crores means around INR 8,000 crores, which is there in the first list of INR 84,000 crore, INR 85,000 crore. And on that -- on the same example, that if the value is taken about 25%, 30%. So it comes to around, say, even INR 2,000 crore or so. And on that 15%, so that INR 300 crore will definitely go in your bottom line, will be going at a profit. Now my question was, which you were explaining, is that since the fund for the remaining amount is guaranteed by the government of India sovereign guarantee. First of all, there is no question of any provision on that. So no additional provision. The provision which is there has to be written back. Secondly, why can't it be treated as income now only? Because, in any case, that amount has to be reviewed. Is it currently by the government of India? So why not the entire INR 2,000 crore INR comes to the -- in the bottom line of the bank?

That will take a call. Actually, like too premature, like once this is formed, as is formed when we get the government guarantee and all that, at that time, we'll discuss with the regulator and take a call on that. So at this point of time, we have not factored that in. We are not factored.

And secondly, it will not remain only at INR 8,000 crores because this is only in the month of June and July, the INR 85,000 crores which is going to be finalized. But ultimately, during this year, it will be almost INR 2 lakh crores.

Yes, yes. Those accounts are also identified. This number is where all the banks have already met and given in principle okay that this can go to in the ARC.

So our banks can be around INR 20,000, INR 25,000 crores out of that INR 2 lakh crores, isn't it, in the whole year?

Yes, that's like -- Ashok, you have any last? Too early. The fast list is around INR 7,800 crores, which we have shared. Like second and third list will come, and it can be close to what we are saying. But then we have no estimate of numbers as of now.

And my last question, sir, is on the advances, when you're talking about 10% to 12% of the growth. In the advances, I mean, everyone is changing, as you know, the retail portfolio, the RAM. So is there any particular thought in the bank to -- because at the same time, you want a higher rate of interest also, you want to increase your NIM also and the yield also. So is there any plan to push MSME in a big way, bigger way in the coming year, where you get a reasonably good rate of interest rather than the large corporate or the retail?

See, we are not avoiding MSME financing. But now we have better mechanism of underwriting MSME loans. There are credit bureaus giving a lot of information, and then we have developed a very good straight-through processing of assessment of MSME. So MSME will continue to be there. But according to us, the MSME growth can be around 5%. But then we are expecting a double-digit growth on retail. And the agriculture also this time also has done well. So particularly, in agriculture, the gold loan portfolio. So that is why we are aggressively planning to grow.

Yes. The gold loan is also one of the areas where definitely we can sell.

Yes. Now we have great South India presence, where this gold loan is very preferred mode of borrowing. So we have built some mechanism to increase our gold loan portfolio, which we'll be aggressively driving during this year.

And sir, since the time is there, 1 more question.

[Operator Instructions]

Okay. There was a query on the difference in other income in the stand-alone and the consolidation. I'd just like to say that the numbers are actually not comparable because the previous numbers are of Union Bank of India, pre-amalgamated. And this year number is the amalgamated, that's number one. Number two is that both the life insurance company that we have as a joint venture, IFLC and SUD Life, their premium income is actually shown as part of the other income in the consolidated financials. So that is the only reason you are seeing that difference. There is nothing extraordinary here. So still, if you have any further clarification, I think you can return to our Investor Relations team.

[Operator Instructions] The next question is from the line of Rishikesh Oza from RoboCapital.

I had just 1 more question. You earlier said that your deferred tax assets of around INR 15,000 crores. So is it fair to say that like for the next 2 years, we won't see any tax on books?

I think, yes, we may not -- because we have accumulated losses carried forward.

So we have accumulated losses of around INR 11,000 crore [indiscernible] tax for this year and also next year, will be set out this 2 years, we are not expecting any substantial tax output [indiscernible].

You heard that, no? Okay.

Yes, yes.

The next question is from the line of Sushil Choksey from Indus Equity Advisors.

My first question is that commodity inflation, oil being at 2-year high. Oil companies working very hard. India is already -- had petrol at INR 100. Commodity inflation at 10-year high, if you look at any soft commodity. RBI and government is managing their borrowing in the current situation well. But don't you think that treasury outlook needs a little different than where we stand today?

Actually, in the treasury note, this time, the G-secs are going to make all the difference because, like every month, we are seeing a lot of buying happening under G-SAP, which is taking away a lot of my securities which are in the money without disturbing my HTM portfolio. So this year, because of this G-SAP itself, the treasury income should go up. And strategy-wise, interest rates are likely to be very stable because, like the way we are seeing the 10-year bond market, around 6%, maybe 5, 10 basis points here and there. So with that stability, like treasury has a source of booking certain income, but then G-Secs are going to be the big differentiator for the treasury this year. Otherwise, interest rate is likely to be very stable this year.

Can you guide the treasury income year-on-year can be better, thanks to G-SAP?

Maybe we will.

Perhaps it's stable. That's what we can say at this point.

So whatever recovery -- like we see in a fluctuating scenario, treasury does better. Now this is a stable scenario. So this time, G-SAP will help them to maintain the numbers what they have achieved last year.

To improve your profitability, you may do long-term loans and avoid the short-term tenders, the banking competition and hybrid in private, public and foreign. Meaning, in what specific area are you seeing growth in long tenure of 7 years, 8 years, 9 years, 10 years kind of lending?

Yes, we actually, like, you're right, actually, because that is where some pricing power is still there, long-term loans, short term. Besides, in LRD and road projects thereto, see, we -- actually, that investment is yet to come back. We are seeing small proposals of some expansion in steel, some expansion in textiles and -- but then, they are quite small compared to our book size. We are able to see some greenfield projects to come in, except the -- like on the solar and other things. So not many. So it is mostly now what is happening is a consolidation in the sector, where good customers are shifting from smaller bank to larger banks, trying to reduce the number of banks, a number of back in the consortium. So mostly these kind of activities. So on the long-term funding side, the mostly -- the funding is happening in road, power transmission, to some extent, so mostly on these. We are not seeing any LRDs and other things.

To improve your cost to income, one is CASA, and second thing is digitization. On these 2 areas, specifically post consolidation is now over, as your opening remarks indicated, what further steps would you take that you strengthen the bank to a greater high?

Yes. You're right. CASA, you would have seen that we have already improved by 2%. We were around 34%, now we are 36%. So we'll steadily grow. There is a lot of effort going on because we are a low CASA bank, so we are very conscious of that. And we are gradually improving. And hopefully, in another 3 years' time, we should cross 40% CASA ratio. That's the effort going on. Now again, like this CASA increase and other loans, no, the digitization is the way forward. So bank has taken a lot of steps, actually, like on the digital side, right, from account to opening to processing of loans. See, we are 1 bank, which already has digitized even the documentation part, even though the numbers are not big at this point of time. On personal loan, preapproved loans, it's a straight-through processing. They can come through either mobile or net banking. Even up to the level of documentation, they can complete the process without visiting a branch. It has also happened in vehicle loans in some states. In MSME, up to INR 5 crores, we have a straight-through processing already built in. So digitally, we are building a very strong mechanism. On the trade finance side, we are already tied up with a software vendor, one of the very famous vendors, and we are in the process. Next 3, 4 months, all my export-import business will move to the trade finance module, which will totally digitize the process and centralize the process. So my customers should be able to sit at home and do all these: export, import, BG/LC transactions into real bill discounting. So there is a lot of work going on, on the digitization side, which will be rolled out during the year.

Sir, further to digitization, human resource needs a big transformation as banks are changing and the process is working. What kind of spend you would allocate towards digitization and human resource upliftment?

See, today, every staff in the bank has to be digital tech-savvy or digital-savvy. There is no other way. Everybody -- either in branch or corporate, they have to work on these technologies. Everybody is being trained on that. And on the HR side, there's a great transformation going -- actually going on. So where we are totally, again, like got into like advanced performance management platform, where there is an individual development plan, training module. So today, I can pick up any staff and know what kind of training he's going through. A lot of relearning modules are there, particularly on the digital learning side. So we are making a lot of efforts on that side. It's not only -- see, getting a technology, you can always get it by spending some money. But unless the staff are tech-savvy, it is very difficult to implement. We understand that, and there is a lot of work going on, on this direction also.

So all these measures would lead to a turnaround time, TAT, in percentage term efficient by 10%, 20% this year or more?

Like, see, today, there may be always exceptions. But on the corporate credit side, you can talk to corporates, and they will tell how Union Bank performs. So I think Union Bank has one of the best TAT in corporate credit, and we are able to garner a lot of business on the corporate credit. On the retail and MSME side, our mechanisms are very, very good because we have centralized the whole process for the whole bank now. So the TAT is, particularly in MSME, is between 7 to 10 days.

Sir, is it -- does it mean that TAT in large corporates being better, are you able to take larger fees or higher interest compared to competition?

Yes. First time, you can see an entry of syndication fee of about INR 7 crores, INR 8, crores, which was not there. So this bank -- our bank this year has earned about INR 8 crores in syndication fee also.

Can this be a 3-digit in crores?

It may take some more time because, see, unless the investment comes in a system in a big way, that number will not improve. At this point of time, there are very few proposals in the pipeline, no, so it may not be there. But then, yes, as the investment credit goes up, so naturally, like we can always look at that bigger number.

Sir, post QIP, you've given...

[Operator Instructions] The next question is from the line of Ashok Ajmera from Ajcon Global Services.

So yes, sorry. Sir, this -- after the Supreme Court judgment of the thing that [indiscernible] where the pro forma, I think, the provision was made for INR 1,536 crores. So that time, how much amount of the NPA in December was taken on which this provision was made? And actually, how much additional amount had gone into NPA or slippage during this quarter in addition to that pro forma NPA?

I think the pro forma NPA was around INR 11,000 crores.

INR 11,700 crores.

INR 11,700 crores as of December. And the actual slippage happened is...

INR 14,480 crores.

INR 14,480 crores in March. So INR 14,480 crores minus INR 11,780 crores is the slippage during the fourth quarter.

No, is it -- some of this part is from those accounts only where the -- means additional for this current 3 months? Or these are all together different parties for this remaining INR 3,000 crores?

Like, it is very difficult to go account-wise. But then, like when you look at it arithmetically, we are like pro forma NPAs are actually NPAs to the extent of INR 11,700 crores as of December. So now net addition to that of INR 3,000 crores were ultimately resulted in INR 14,700 crores in March, actual recognition. So you can say, in the Q4, about INR 3,000 crores of the NPA got added to the pro forma NPA. And again, like what happens is when we recognize NPA, when we have a particular customer ID, all the accounts get recognized as NPA, whether pro forma NP or otherwise. So you can't say that the same NPA account is what increased. It will be new accounts, which would have added. That is that interpretation.

Okay, sir. My second question was on -- was back on the -- this provision for the fraud account, that INR 938 crores has been carried forward.

Yes.

But how much has been provided in this quarter on account of these fraud cases? Is it INR 938 crore?

It's carried forward. How much is forwarded in this quarter, I'll tell you.

Around INR 350 crores.

Around INR 350 crores.

So in the next -- so this INR 938 crores will be in April, June and July, September or...

Yes. Next 2 quarters, it will be absorbed by June -- by September quarter, it will be absorbed.

By September, it will be absorbed. Okay, sir. By next...

[Operator Instructions] The next question is from the line of Mahrukh Adajania from Elara Capital.

Sir my..

[Operator Instructions]

Can you hear me now?

Yes. Loud and clear.

Sir, revaluation reserve. Would you have a number for revaluation reserve?

We will definitely have -- we'll share with you revaluation reserve number. We'll share it with you. I think we've been really not able to..

Not a problem.

INR 2,047 crores.

INR 2,047 crores. 2-0-4-7 crores.

[indiscernible]

That is the full value.

[indiscernible]

So that is around INR 5,000 crores?

[indiscernible]

And INR 4,500 crores.

Thank you very much. Ladies and gentlemen, due to time constraint, that will be the last question for today. I will now hand the conference over to the management for closing comments.

Thank you. Thank you for your participation and for the questions. Your questions always lead us to look at our numbers again and reorient our strategies. Thank you. But if you look at the performance during this year, this was the most difficult year, not only because of the COVID, and also because of the amalgamation, which we went through. And the first 6 months, basically, like in addition to the COVID, we were resetting the administrative officer, setting up our centralization and other departments and all that. Despite that, if you look at the performance, bank has done very well. The profit of INR 2,906 crores, after making provisions, reaching provision coverage ratio of 81% is a very good improvement over previous year. At this point of time, we strongly feel that the bank's balance sheet has improved substantially. The operating profits have reached the substantially high levels. So like when you are assessing the valuation of the bank, please keep all these numbers. We have shared whatever details you wanted. And we are also available offline if any data is required. So please look into our numbers positively and also help that like we improve on our profitability and performance as we go forward. So thank you. Thank you so much.

Thank you very much. On behalf of Union Bank of India, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.