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 June 30, 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 be open for interaction. Before getting on today's 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. With this, I now request our MD and CEO for his opening remarks. Thank you. Over to you, sir.

Good evening, everyone. It is a pleasure and privilege to meet you all for Union Bank of India Financial Results for Quarter Ended June 2021. The first quarter of the current financial year was marked by second wave of COVID 19, disrupting life and livelihoods. Banking industry continued to anchor relief efforts with enhanced liquidity and credit measures. Encouragingly, with COVID cases declining beginning June, high-frequency data signaled revival, gaining momentum in the economy. Google mobility indicators show grocery activity returning to pre-COVID levels and retail and recreation activity showing sequential uptick. Power consumption growth, the momentum in rail freight, UPI transactions also improved sequentially in June 2021. Healthy margin coverage, water reservoir levels and [ in that regard ] employment boosts well for rural sector residents. The combination of fiscal and monetary measures with rising vaccination coverage all go well for business opportunities going forward. Coming to the bank's business and financials for the quarter ended June 2021. Operating profit of the bank grew 31.5% year-on-year and stood at INR 5,303 crores for the quarter 1 of the year 2022. Net interest income registered a growth of 9.5% year-on-year and stood at INR 7,013 crores during the quarter 1. The global NIM stood at 3.08% for the quarter 1. The net profit stood at INR 1,181 crores during quarter 1 of '22. And again, net profit of INR 333 crores for the quarter 1 of previous year, registering a growth of 254.9%. In terms of business, the RAM sector noted 8.9% year-on-year growth, raising its share in domestic loan book total to 56.1%. Within RAM sector, the retail advances grew 10.6% year-on-year and agriculture advances grew 12.7% year-on-year. In the liability side, total deposits grew 1.8% year-on-year, led by lower-cost CASA deposits, which grew at 11.2% year-on-year. The CASA ratio thus stood at 36.39% as of June '21 as compared to 33.3% a year ago. Of asset quality, the gross NPA ratio stood at 13.60% at the end of June '21 compared to 14.95% in June 2020. Net NPA stood at 4.69% compared to 4.97% 1 year ago. On capital front, the bank has raised INR 1,447 crores of equity capital through QIP in May '21, and has raised its Tier 2 bonds of INR 850 crores in June '21. The bank has further raised INR 1,150 crores in Tier 2 bonds during the current quarter. Friends, a number of initiatives are underway. As part of our long-term strategy, the bank has initiated post amalgamation transformation journey with a focus on increased digitization by way of launching a project named, SAMARTH 2.0, to identify and implement digitally-enabled initiatives across the bank to realize larger benefits post amalgamation. The bank aspires to achieve many benefits from SAMARTH 2.0 in the next 2 to 3 years, like customer journey through digitization, long-term synergies and digital channels revamp, revamp the cost, cards business models, digitizing back office, new digital sales-oriented and MSME branches. There is a brief on this initiative given in the analyst presentation, which you can take into account while analyzing the value potential going forward. You may recall that during the financial year '21 earnings call, we have given guidance on certain parameters. We are happy to share that our actual performance during Q1 is mostly in line with the guidance. However, let me reiterate our guidance for the year '21/'22. Deposit and advances, the range is -- growth is 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 around 2.5%. The delinquency for quarter 1 of this year, largely driven by MSME segment, which slipped to the extent of INR 3,139 crores, attributed to business disruption due to lockdown. Going forward, restructuring ECLGS opportunity wherever eligible, and as the economic activity has resumed, we expect nominal slippage we said previous under this segment and this will come down substantially. With this guidance, I conclude my remarks. We are grateful to analysts and investors attending meeting for their support and feedback that helps us to take informed decision in our journey, to our efficiency and profitability. I look forward to your questions. Thank you.

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

Again, compliments to you because I would start with first giving guidance. The kind of guidance you had given, I think more or less all the parameter, on the contrary, the credit costs have come down, the NIM has gone up substantially in the guidance. Most of the parameters are better than what the guidance you had given. My only one concern is, sir, on the advanced growth, credit growth side because even in this quarter also, we have been saved by phenomenal treasury profit and treasury operation. And -- but for this, like in the normal banking operations, we would have left behind because most of the money is invested through the treasury and then there is a treasury income also and the profit also, altogether about I think INR 2,067 crores if I go on the segment-wise profitability. So what is actually is the -- our plan because this how do we -- how are we going to achieve this 10% or 8% to 10% of the credit growth target? From where it is going to come? Because the retail is also too much crowded now. So your comments on that. My second -- one point is that on the NARCL. Last time, you had said that 17 accounts of INR 7,800 crores identified. And so what is the progress on that? Whether the assets have been fully identified, valued? And how much are we going to receive the money from the 17 accounts of INR 7,800 crores? My third is only a small data point. If you look at the advance figure, the loan figure, which is mentioned in the balance sheet of INR 5,84,596 crores. And if you take your advance of INR 6,45,091 crore, reduce the provision figure of INR 60,687 crore, there is a difference of INR 192 crore. So I don't know, I mean on this arithmetic is, what could be this INR 192 crore element? So these are my few observations and the questions on this first round of my opportunity, which is given to me, because I know that the moderator will otherwise cut me down. So please, if you can answer this.

Yes. Thank you, Mr. Ashok. On the credit growth side, if you look at retail and agriculture, we are -- like retail has grown at 10% despite the COVID disruption and agriculture has grown at 12%. So we foresee a much bigger transaction on the retail side, and that is the RAM sector side as we go along. On the corporate credit side, yes, we are ready to see the traction because working capital utilizations are quite low, even the term loan sanctions are not being used. But then what we are seeing is good economic activity picking up. So hopefully, working capital utilization levels will go up. And that is what we are hoping, by end of Q2 or like in the Q3, we will see a traction in the corporate -- large corporates also by way of utilization of the limit and also utilizing a term loan sanction. So we are also seeing some activity of investments happening, particularly in some of the sectors. So we've -- all put together, once the corporate -- large corporates start growing at around even 5%, 6%, then it is very easy for us to achieve 8% credit growth. So that is our expectation. So by the end of the year, we are very confident that the credit growth for the bank will be more than 8%. But then you are concerned on the earnings side. If you look at the net interest income, so that is steadily growing because our average advances is holding. Like, even though the credit growth numbers are coming mostly because of the short-term credit because of the interest rate differential between banks, they are moving from bank to bank. Because of that 2%, 3%, 4% difference in credit growth you may see. But from an earnings perspective, it is not going to make a big difference. But that growth is definitely required. So it will come, and I'm very sure that by end of the year, the growth numbers will be there, but it's not going to have a major impact on the net interest income what we are already seeing. On the NARCL side, our number of that 17 accounts of INR 7,800 crores, they are broadly crystallized from our side because we did exercise of identifying the accounts, but then the action has to come from the other side. Now this NARCL, actually, you may be aware that it is progressing well. But then there are many approvals needed. Now the next step of action will come from the NARCL side because after their approvals from the concerned regulatory bodies, they will do the process of acquiring these assets. We need to wait for that, but I'm very sure this will happen. Quickly, I will not put a deadline to that, but then this is progressing very well. On this difference of INR 192 crores, my CFO is here, he'll be able to explain. He is actually...

[ That would be, that's from ] INR 645 crores from other provision...

INR 645 crores minus this thing. There will be some provision, which like might not have been captured. So it is only because of that, from the outstanding number to the balance sheet number. So we'll be able to clarify off-line to you.

Yes. Because this amount of the provision of the gross NPA is INR 87,967 crores -- INR 87,968 crores. INR 27,281 crores is your net NPA. So the difference is INR 60,687 crore. If you reduce this from INR 6,45,000 crores, it comes to INR 5,84,404 crores.

I got your point. I will clarify offline.

Our net NPA -- Mr. Ashok, our net NPA is INR 27,437 crores. INR 27,281 crores was the March figure.

Yes, yes, 487. Okay.

Right now it is INR 27,437 crores. Maybe that is the difference, I think you facing it.

438. Okay.

The next question is from the line of Mahrukh Adajania from Elara Capital.

Sir, I had a few questions. Firstly, I just wanted to clarify, this MSME restructuring. The outstanding stock of MSME restructuring would be around INR 5,000 crores. Is that the right number?

Yes, from Resolution 1.0, the -- No. 1.0 MSME restructuring was around INR 2,427 crores, and the Resolution 2.0 is around INR 954 crores. This is what is MSME restructure is in the Resolution 1.0 and 2.0.

Yes. But there was the MSME scheme that were extended.

No, no, that was around INR 2,700 crores. So you're right. Under the old scheme of 2019, so around INR 2,700 crores was there. Right, I agree. Yes.

So INR 2,700 crores?

INR [ 2,500-odd ] crores. Yes.

Got it. Got it. Got it. And sir, the other question I have is that would it be possible to share SME to below INR 5 crores?

Nitesh, do you have that number?

Yes. I think it is around 3.7%, all SME-2 inclusive of [ fiber and LL ] also, which is compared to last quarter, I think it was around 2.35%.

So including even small ticket below INR 5 crores, it's 3.7%.

Correct.

Got it. And sir, would there be any recovery included in NII? The recovery from -- some banks have included recovery from Kingfisher in NII. That's why I'm asking.

INR 330 crores.

No, no, no, not that.

[ All for number ] is there, around INR 150 crores.

Sorry?

Around INR 150 crores of interest income is only post the recovery.

Got it. And the rest is in other income. The total recovery would be how much?

Total recovery from write-off is around INR 300 crores. But that is in other income.

Correct. And then INR 150 crores is in...

INR 150 crores is, actually, we changed the accounting policy, which all the major banks were practicing for many years. We changed it this year. So that's why it has come there. So we changed the policy. Generally the recovery is appropriated to interest and other charges first and to the principal later. But earlier, we were doing it to the principal directly. So we changed that principle. So with that, about INR 150 crores extra interest was recovered, which would have otherwise gone to reduce the gross NPA as per the old policy.

Got it. But that INR 150 crore relates to Kingfisher or everything?

No, no, no. It is not Kingfisher. It is a normal recovery. When I do a recovery in any NPA account, now the [ foundation ] goes to the interest first.

Got it. Got it. So there's no lumpiness on account of Kingfisher or anything?

There is no lumpiness. And this is a very normal thing. And quarter-on-quarter, the same numbers may come. But on the corporate side, it will not have much impact because on the gross NPA, that reduction would have helped me in lesser provision.

Correct. Correct. Correct. Got it, sir. And sir, any -- so do you have any pending restructuring pipeline? Whatever is implemented is clearly given in the presentation. So over and above that, any pending?

Not on the large corporate side because that's all complete. Whatever was due was completed. So under Resolution 2.0, up to 20 -- like, this MSME and retail is eligible for restructuring up to 30th September. So we expect roughly INR 2,000 crores of restructuring during second quarter.

INR 2,000 crores.

Yes.

The next question is from the line of Jai Mundhra from B&K Securities.

Few questions, sir. First sir, on your agri NPA, right? So the quantum is not that big, but still it looks like that other banks have not -- I think other PSU banks have not reported even this much amount of agri NPA. So I just wanted to check is there any state-specific issue? Or is there some uniqueness to this agri NPA? Because other banks we have reported very miniscule set of agri NPA.

No, I cannot comment on other banks because agri NPA, some interpretation issues were there that like on the renewal side, particularly on the crop level renewal side, what is the cycle we need to take. So since we went through the amalgamation. So we put a prudent -- no. With that, actually, we saw some increase in NPA because of the amalgamation like we -- like our previous policy, which was applicable for Union Bank. Because of that, we could have seen some increase in agriculture NPA. But otherwise, it is stabilizing. We don't foresee any bigger NPA coming now.

Right Okay. And similarly, there is large corporate, while the amount is not big, considering the balance sheet size. But again, it looks like this INR 1,400 crores of large corporate you're presenting is also slightly unique. So can you throw some light at any specific sector or where these large corporates are coming from?

Yes. Actually, in the last minute, 1 thermal power project split, which is amounting almost INR 800 crores.

INR 900 crores.

INR 900 crores, 1 thermal power, which actually because 1 discount payment got delayed in the last minute. This was not anticipated. So that is something between INR 800 crores to INR 900 crores, one. And 1 jewelry account, which is almost expected to slip. That was another INR 300 crores. These 2 are the chunky accounts. Otherwise, large corporates, there was nothing.

Okay. And the thermal is part of a U.P. base group, right? Is that -- because that was...

That was Southern Group.

Okay. Understand, sir. Okay, sure. And so that is helpful, sir. And second on restructuring. So in your notes to account, you say that MSME restructure is INR 6,200 crores. And I mean just wanted to check that does it already include your INR 2,700 crores of -- INR 2,400 crores of MSME restructuring under 1.0? Or these are like additive numbers?

Yes. Total MSME is shifting is around INR 6,100 crores. It includes that 2019 MSME split, plus INR 2,427 crores under Resolution 1.0 and about INR 954 crores under 2.0.

Got it. Sir, INR 954 crores is some different numbers because in your presentation it showed some INR 536 crores. Is this the same thing or...

Below INR 25 crores, I think. Because this is some disclosure, I think it is below INR 25 crores, and that will become -- because after INR 50 crores it is eligible, so that's a difference. But then it's a total MSME. INR 954 crores in the 2.0 is the full number.

Understood. Understood. So sir, this 2.0 number should actually be higher by INR 400-odd crores, right, versus what is there in the presentation? Because that would not have been include in the personal loan for sure, right? So that will be...

No. INR 3,962 crores is the restructuring under 2.0. Out of that, INR 2,855 crores is under personnel, that is a retail part, and INR 954 crores is MSME, the rest is coming from agri.

Understood. Understood, sir. And the last thing, sir, from my side is -- sorry, 2 last things. One is the tax thing. So we also had accumulated losses from erstwhile Andhra Bank and the other bank. So why don't we -- irrespective of which tax regime you are in, we can still set off the accounting profit against the accumulated loss? Or is there some challenge in that treatment?

What it has done -- accumulated losses are set up against the [ Bhushan ] premiums. We have cleared that.

But you can still set up -- once you have set up already under share premium, then you can still reduce your accounting profit through those or no? Because 1 -- I mean 2 banks have already done when they've paid a negative tax rate.

So for me also, last time we had made this disclosure saying that the accumulated losses carried forward for accounting purposes, even though we are set up, we will have the tax benefit. So that's why we have not made any tax provision, if you see this time. That INR 535 crores, what you see is we are reducing the DTA. Actually, this time, we started reducing the deferred tax asset. We carry about INR 15,000 crores of DTA because it was carried over from previous years. So now actually, since now the -- we are into profits and a lot of write-offs are happening, so we are gradually bringing down that. So this year -- this quarter, about INR 535 crores of DTA we reduced.

Right. So DTA reduction as and when you move to the new tax regime, this will anyway be [ in the P&L ] right?

It will help us just because I have to gradually bring down DTA. It will help in multiple ways because this DTA gets reduced from my equity. And that's why my book value -- adjusted book value comes down. And it also goes down like from the CET1 also, core equity. It gets reduced from there. So as we round it off, as we reduce the DTA, my capital CET1 goes up.

[Operator Instructions] The next question is from the line of [ Ravi Kumar ] from Hyderabad Investments.

So we have been investor with Andhra Bank since a decade -- more than a decade, and also, of course, a customer since more decades. Sir, just I would like to bring up 2 points to you. One is the transformational changes. When every other bank, majority of the banks are working seamlessly irrespective of the location, so these particular banks are not customer-friendly. For every purpose, they ask us to come to the bank and give the application, come to the bank and speak to the manager. In this global era, our bank will be in remote area and we will be staying in cities. And on top of this, sir, the charges, what kind of charges they are applying, mindlessly they are applying. The thing is they don't even have the understanding before we do any transaction. They're simply applying the transaction charges and they are very huge. And in that way, as a customer, what I'm doing is, I'm utilizing the Andhra Bank service, Union Bank service for whatever I require, and then I'm putting all my money from my savings account, like whether it is INR 2 lakhs or INR 5 lakhs into some other customer-friendly bank. So the CASA ratio, right, the moment we put some money in savings bank account and leave it for 3 months, 6 months, that is where bank is going to make the money. And at the same time, it's paining the thing like bank is cheating. So the bank staff doesn't have any answer. And even if we talk to the customer care, they are also helpless. And I'm seeing very careless attitude towards customers, sir. If this did not change, I think God has to save this bank.

Mr. [ Ravi Kumar, ] please don't generalize. So if you have a specific issue with the particular bank, please send it to us. We will talk to them and ensure that this is sorted out. I would encourage you to use My Mobile platform or net banking platform, so that will help you not to go to the banks because most of the transactions are permissible under mobile and net banking, but we can take your issues offline and sort it out.

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

Sir, I have a couple of questions and some clarifications required. Just carry forward this fraud INR 485 crore has been carried forward for the RBI guidelines. But how much provision for the fraud has been made during this quarter is not mentioned. Can you give me that number that in this quarter, how much have you provided on account of the fraud?

INR 500 crores almost. How much it is?

No, no, INR 485 crores is...

INR 485 crores is the carry forward. But this quarter, we have made about INR 500 crores...

INR 552 crores for...

INR 500 crores is the provision we have done during this quarter.

Yes. So generally, it is mentioned in the notes and other, maybe Union Bank also earlier. This time, it is only mentioned that this much amount is carried forward.

Only a small amount is pending now. Yes.

Yes. And sir, this additional provision of INR 981 crore made on the 9 accounts, what is the total outstanding in these 9 accounts from Note #16?

One minute, I'll just come back to you on that. Sixteen accounts -- Note number 16. I'll give you the time...

And sir, Note number 23, sir, these 2 accounts, which are by NCLT Kolkata for not providing as an NPA, INR 2,640 crores. Can you throw some more light on this because provision has been made for INR 862 crores on these accounts. What kind of...

We have not mentioned the name. But then like we gave some -- because this is a standard asset as of now. So this provision what we have done, it will go under standard asset provision. As a precaution, we have done it because there is a stay on classifying this account as NPA. So as abundant precaution, we have made up to 30% provision. Last quarter, we have done 15%. And this quarter, we have done 15%, as a precaution. Because when it actually -- when the stay goes away, it will split, so the bank should not be caught unaware. And since we had a cushion to make the provision, we have made 30% provision.

Yes. No, sir, I mean I understand I mean whatever it be legally required and even otherwise also you have done it. But what is the nature of those accounts? Are they actually going to sleep? Are they actually the bad accounts? Or there is some possibility of these accounts...

But for the stay, they would have been NPA accounts.

Okay. So whatever the provision is made is according to you sufficient to take care of...

Actually, yes. Like a -- see, these are precaution we are taking, so that generally when it becomes substandard it will make 15%. And then after a year, it has to go to 25%. But then as a precaution, we are keeping a higher provision. And because we had the patience to do that, we did that. So it is a matter of -- see most of the public sector banks, nowadays, we'll try to keep higher provision. We don't want to postpone the recognition and provisioning. We want to take it upfront so that the balance sheet is currently reflected.

But you know some of the banks, who used to make extra provisions, floating provisions earlier, now all they are can giving that to bring the books in black actually. Because that earlier, even instead of 15% RBI standard is 20% used to be provided. I think most of the banks have stopped doing that. But anyway, I think you are heavily -- I mean properly cushioned with all those kind of -- I just wanted some clarity on these 2 accounts. Sir, last time, you had said that out of those FITL, those interest on the loan for 6 months moratorium, some INR 58 crore was pending to be received. That has gone bad or any recovery is made out of that, those accounts?

I don't think there's anything remaining from FITL. I think we were able to sort it out.

So then there is no...

No issues which percolated from that because we were anticipating that because of the FITL non-recovery, so it will percolate for some bigger slippage, but that didn't happen. We could manage that.

Okay, sir. Sir, now my next point is on this...

[ Transition of FITL? ] Yes, please?

Have you got that Note number 16, this thing?

We will share with the -- on this day, we are not having.

Sir, can you throw some light on this Mudra loan, sir, especially this [ Kishore and Tarun ]? What is the status? And how much percentage of that is generally, as for your experience, going to go bad?

Actually, Mudra is broadly in line with the MSME, actually. So up to now the NPA is around 16%. But then that is broadly covered by credit guarantee scheme. So we don't foresee major losses from the 16% NPA. They are covered under guarantee scheme.

All right, sir. Sir, on this credit front, you said, of course, the corporate MSME or corporate credits are going to come, maybe you might see in the third or fourth quarter. But what I see is that the cement and steel, especially steel industries are almost re-rated now. I mean many of those steel earlier the banks used to rather keep them away. Those industries have started performing well. So have you started receiving some kind of application from the cement, steel and basic infrastructure companies in the corporates? Is there any green shoots?

Yes, we started receiving. Actually, there are a few sanctions also which have happened. So -- but then they don't have the capacity to change my number totally because these are all like sanctions in few hundreds or maybe INR 1,000 crore kind of sanctions. Because for a book -- large book of our size, unless we see a traction of INR 5,000 crores, INR 10,000 crores, you'll not feel that number going up. But then we see at least 3, 4 new steel company -- new in the sense, the capacity expansions happening. And we are receiving these proposals, even in cement also. In textile also, we are seeing that.

[Operator Instructions] The next question is from the line of Abhijeet Sakhare from Kotak Securities.

The first one is the upgrade number, about INR 3,100 crores. Are there any large accounts here?

Yes. I think last time also I made this statement because 1 large corporate account, which was under restructuring, so about INR 2,000 crores. So this quarter, it got restructured and got upgraded.

Okay. Got it. Sir, second one is the employee cost has been slightly higher this quarter. What should we look at in terms of the full year numbers here?

Employee cost per quarter will be around INR 2,500 crores. This time, we had about INR 300 crores extra because of some -- one was, actually, we paid some incentive, what we call performance is that due, that is once in a year. So that was about INR 90 crores. And some provisioning we had to do for some terminal benefits. So it's about INR 300 crores more than the normal. Otherwise, it will be around INR 2,500 crores per quarter.

Okay. And sir, one clarification on the restructuring that we are doing. What is the nature of restructuring here? Are we giving a blanket kind of a moratory based on the product you can highlight?

It is mostly the moratorium. It is the postponement of the installment, mostly the restructuring in that line.

And how long is that?

It is anything between 6 months to 24 months, so depending on the case. So there is no general number I can put. But then it is between 6 months to 24 months.

Okay. And sir, last one is like the government has increased the size of the ECLGS scheme itself. But we're not seeing banks kind of utilizing it at least as far as the numbers that are coming out so far. Any comments, sir?

Actually for getting the -- like see the -- under the second resolution, the 2.0 and the ECLGS, which is coming, if you have to give the second dose, somebody has taken 20%, now they're eligible for another 10%, that account has to be necessarily restructured. So that is one condition. So -- because of that, there is some reluctance on the part of the borrower to avail that 10%. So we are trying to work around that. So that is one of the reasons. But otherwise, this kind of short disruption, only 2 months. So things are almost back to normal. We could see that in June when we went for collection, things are almost back to normal. And if you see the slippage also, the accounts which were stressed and which could not come out, we have classified them as NPA. You could see that number. So that's why the restructuring was only INR 954 crores in MSME this quarter. But then the NPA number was higher. So I think like -- these are a lot of almost recognized now in the MSME. I feel that these all recognized.

And sir, last one, the slippages that we are seeing on the SME side, these accounts have utilized any form of restructuring in the last 2 years, the scheme that has been running so far?

No, I didn't get your question. You are talking about 2019 guidance on MSME restructuring?

Yes, yes. Yes.

We have INR 2,800 crores of restructuring. Out of that, some accounts are slipping also. I think this quarter, we saw slippage of around INR 200 crores out of this book, roughly, roughly. I can give you the exact numbers, but then broadly, I think it is around that. So that is a old restructuring of 2019.

The next question is from the line of Rakesh Kumar from Systematix.

Sir, just 1 question, and this is pertaining to the [ seasonal ] investment we generate. So this is closely around 5.9%. So just wanted to get the adjusted number for amortization between loss and capital gain. So how that number looks like because considering the funding cost and all, how do that your investment part of businesses is growing? If you can help me with that number.

Rakesh, would you repeat your question? Hello?

Hello? Mr. Rakesh, can you repeat your number -- the question?

So I was trying to arrive at investment scheme. Reported number is 5.9%. But since the amortization figure comes only on a half yearly and full year basis. So adjusted for amortization cost on the investment portfolio, and then [ there's within yours ] a depreciation on the book, what is the normalized number or adjusted number on the investment book, if you can help us with?

No, I'm still not able to figure out, but I can give you some numbers to help you calculate. So shifting cost is around INR 130 crores. And the -- I think amortization anyway is happening on the daily basis. It's not about half yearly or quarterly basis. So that is already accounted for in the investment. And in terms of depreciation of investment, we have around INR 200 crores of reversals this quarter. I'm not sure whether I have helped you get the number.

Sir, I was just trying to assess that credit part of the business is okay. But the investment part of business, how regulative is on the spread basis. So that was the adjusted number I was trying to arrive at.

Yes. Okay. So let me also add some more color to this. Today, if I look at the bulk deposits, most of these bulk deposits are coming at the average rate of maybe between 3% to 3.25% kind of thing. So that is one source of funds which we are deploying in the investment and earning maybe somewhere around 5.5% to 6% of yield. So that obviously gains around 2% to 2.5% of clean margins on the investment book also.

The next question is from the line of Mahrukh Adajania from Elara Capital.

Sir, what was the recovery pipeline for the year? And how much of that would be from NCLT?

This is something we are very comfortable answering. So actually, like -- before Ashok gives you numbers, actually, this quarter, our recovery upgradation was above INR 5,000 crores. So if the cash recoveries, which is core to reduce the NPA was INR 1,147 crores, upgradation was INR 3,194 crores. In addition to that, we had a recovery from write-off accounts of about INR 300 crores and other cash recoveries of INR 400 crores...

INR 464 crores.

INR 464 crores, which all put together it was about INR 5,000 crores. But then, like for NPA reduction purpose, it is around INR 4,300 crores, recovery plus upgradation. The full year number, we are told that it will be around INR 13,000 crores, recovery plus upgradation, out of that INR 4,000 coming from the NCLT and INR 9,000 crores from other recoveries. So this INR 4,000 crores of NCLT this quarter, we have not received much, but we expect we have a pipeline. I think Ashok will take over. He will give you the numbers.

Yes. Madam, I can just to tell you, 2 things which gives you this comfort. One is that we have 61 accounts, which are approved by the [ DOT. ] And that amount, resolution amount is INR 2,127 crore. And there are 35 accounts, which are already approved by NCLT and it is around way of implementation. That amount is INR 3,529 crores. So total, during the entire year, we have 96 accounts in the pipeline, and the total resolution amount itself will be INR 5,656 crores. So we are very, very conservative we are taking the estimate recovery from the NCLT that we are expecting in terms of [ full volume now. ]

Got it, sir. And sir, sorry, could you just repeat the -- so in quarter 2, you gave Jai some numbers, but I could not pick that up. So the MSME restructure is INR 964 crores. Then you also give an agri restructuring number, which I missed. Can you please repeat it?

See, total restructuring was INR 3,962 crores. Out of that, INR 2,855 crores was retail, that is personal loans, INR 954 crores is MSME, others come from some allied activities. Actually, agriculture is not eligible for restructuring. Some of the allied activities under that sector are eligible, so which came in. That comes to around INR 150 crores or INR 154 crores, that's all.

[Operator Instructions] The next question is from the line of from Sushil Choksey from Indus Equity.

I had a simple question. Will we raise equity this year? Or the equity raise what you have done is sufficient for the year?

Actually capital-wise, we are comfortable because as it is my CET1 is 9.7, and with the kind of planning that we have it will be upwards of 10 by the end of the year. So that way, we don't need equity. But if we raise equity, it will be at the end of the year, if at all we raise, and mainly because we have to bring the public flow to 25%. So today, 83% is handled by the government. So we have to bring it down by another 8%. Only for that reason, we may have to raise the equity. Otherwise -- yes.

Sir, this 8% is mandatory in the current financial year or it can be...

No, we are short time now. So maybe we are getting that relief. So if we get time, then -- depending on the conditions, we'll raise, but I don't think we need to raise equity this year for our business requirements.

Okay. Then sir, you spoke about taking deposits and swapping into investments. I think Nitish sir answered that question. Are we building more of a corporate book with a 3-year, 5-year 10-year? Or are we looking at some government bonds? Because I'm asking from more a point of inflation in the current market sense.

Yes, Nitesh.

It's a mix from both actually, both the government bonds as well as the corporate bonds, and across the tenure, but biased more towards the 1 to 5 years bucket.

Sir and we are...

And we are mindful of the likelihood of interest rate going up. So considering that only, book is being...

Next question is from the line of Anand Laddha from HDFC Mutual Fund.

Sir, on your guidance of provisioning costs, 2% for the current year, does it also include the aging provision which are likely to come for us?

Yes, yes. It is including everything.

Okay. And sir, in terms of our tax rate, we would remain at full tax rate in the current year? Or how one should assume?

Yes, we are out of tax net for this year because of the carryforward losses. So we may not be paying any tax this year. So we are planning to move to the mix -- we started resisting our DTA now because we carry about INR 15,000 crores of DTA. Gradually, we have to bring it down. For moving to tax -- new tax regime, I think we may have to take a hit of about INR 5,000 crores. So that's why we want to bring the DTA down during this year because the profitability is good. And maybe next year, we can plan, we'll see either by end of March '23, because we have a cushion for this year. Next year, we may think of moving to the new tax rate, yes, but not for this year.

Okay. But sir, there is no compression for you to move to new tax regime?

Absolutely, no. And this year, it is not eligible also because we are not liable to pay tax this year. We have enough cushion. Next year, yes, we will think of it. Before that we'll see how this year pans out, because there are some, like good recoveries in the horizon. There are some divestments which can give me some good returns this year. So if you get a good cushion, then we will try to use that and -- because when I reverse DTA, not only my hit comes down, it adds to my capital because now it is reduced from the capital.

Correct. Correct. Sir, you indicated the recovery target of INR 13,000 crores quarter before this. So if you can take up this, how much is the recovery from the [ Dunar ] project? And how much would be the recovery and upgrade part of the NPA movement?

Yes. The company in the technical write-off, what we are presenting is to the tune of around INR 1,000 crores...

Okay. Okay. And balance -- of the INR 13,000 crores, INR 1,000 crores could be from return of asset, balance INR 12,000 crore would be part of your NPA movement?

Yes. And remaining the NCLT, already, we have projected around INR 4,000 crores. And through non-NCLT route also around INR 4,000 crores and INR 1,000 crores is from the technical write-offs. So it comes to around INR 9,000 crores. And INR 4,400 crores already we have booked now. So it all put together, I think we are talking INR 13,000 crores.

So would it be fair to assume, sir, recovery upgrades this year will be closer to the slippages we would have?

They are planning, and we are trying to move in that direction.

Okay. Okay. And sir, any guidance or -- you can give in terms of ROA, ROE, sir?

Yes. Definitely, yes. I think Nitesh.

See, Anand, last time, last quarter, we have given a guidance of around 40 to 50 basis point ROA for this year. So we stick by that. Q1 performance is in line with that. So even on the normalized situation, we should be able to have 40 to 50 basis points of ROE. That will be, as you have seen, driven by the growth in the NIM stability of the other income and the reduction in the credit cost.

And ROE...

ROE, we have guided for 8% to 10%. This quarter, we are at 10%. But we'll maintain the guidance for 8% to 10%.

There is 1 clarification. Mr. Ashok earlier asked that question. So Note 16, there are 9 accounts with outstanding of INR 3,151 crores, for which a provision of INR 980 crores is made because there was a delay in the resolution. I think that satisfies his question, Mr. Ashok Ajmera.

[Operator Instructions] As there are no further questions from the participants, I now hand the conference over to the management for closing comments.

Thank you. Thank you for your time. Maybe if you look at the numbers, this is a very stable quarter compared to the previous 3, 4 quarters because we had an impact of not classifying as NPA for 2, 3 quarters and because of the moratorium and the last quarter, suddenly, there was a huge slippage, interest reversals. So the numbers were not very stable to look at. But this quarter has been very stable. We don't have any one-off kind of things. Actually, these are reflecting the normal business scenario. Despite the 2 months of second wave, which totally disrupted our working, in April and May, we could come back strongly in June, even though slippage numbers are slightly above our comfort level. But then again, this happened because of 1 or 2 large accounts slipping and some higher slippage in MSME. We are very confident that the projection on slippage, the delinquency will be also maintained and the numbers that we have reported in the first quarter will remain stable and will improve, and we see a lot of traction on the recovery side also, which is improving day by day. So with this, actually, we like -- we'll continue to do well. And I'm very sure the third wave may come, but it may not disrupt the economic activity to that extent, which happened in the first wave. Like, second wave was impacted but -- was impacting us, but then it went off very quickly. So we could come back to normalcy pretty quickly. So I -- like -- I request all the investment community and the analyst community to look at us positively and support us in all our endeavors for the coming quarters. Thank you so much.

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