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 December 31, 2024. The bank is represented by the Managing Director and CEO, Ms. A. Manimekhalai; Executive Directors, Shri Nitesh Ranjan, Shri Ramasubramanian S.; Shri Sanjay Rudra, Shri Pankaj Dwivedi; and other members of the top management. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ajay Bansal, Deputy General Manager. Thank you, and over to you, Mr. Bansal.

Good afternoon, ladies and gentlemen. I, Ajay Bansal, Head of Investor Relations, welcome you all for the United Bank of India earnings con call for the period ended December 31, 2024. The structure of the con call shall include a brief opening statement by respected MD and CEO ma'am, and then the floor will be open for interaction. Before getting into the con call, I will read out the usual disclaimer statement. I would like to submit that certain statements that may be discussed during the Investor Relations 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 statement. Investors are therefore requested to check this information independently before making any investments or other decisions. With this, I now request our respected MD and CEO ma'am for her opening remarks. Thank you, and over to you, ma'am.

Thank you, Bansal. Good afternoon, everyone, and welcome to Union Bank's financial results announcement for the third quarter ended December 31, 2024. Thank you for joining us today. I am sure that you have had the opportunity to review our results. As we are navigating through a challenging macroeconomic landscape characterized by tight liquidity conditions, which was eased a little by the Reserve Bank of India yesterday. Moderating urban demand, uncertainty arising from global developments, volatility in the Indian rupee and capital outflows. These factors are exerting pressure on the banking industry. However, positive development such as recovery in rural demand driven by higher agriculture growth and gradually easing inflationary pressures are expected to support economic growth. Moving to the bank's performance, we remain steadfast in our commitment to sustainable growth with a balanced focus on top line and bottom line performance. Our strategy prioritizes profitability and operational efficiency over aggressive growth. The bank delivered a strong performance in key areas such as asset quality, capital adequacy and profitability, ensuring long-term value creation for all its stakeholders. Let me now review the financial highlights for Q3 FY '25. The net profit reached INR 4,704 crores, marking a 28.2% year-on-year growth. For the 9 months ended December 2024, net profit stood at INR 13,002 crores, registering 25.8% growth year-on-year compared to the full year FY '24 profit of INR 13,648 crores. Return on assets improved to 1.3% and RoE reached 17.75%. Capital adequacy stood at 16.72% with a CET1 ratio of 13.59% as of December 2024. Asset quality, gross NPA reduced by 98 bps Y-o-Y to 3.85%. Net NPA improved by 26 bps to 0.82%. Provision coverage ratio increased by 88 bps [Technical Difficulty].

Sorry to interrupt you ma'am, your voice is breaking. Kindly wait, I will just reconnect your line, ma'am.

Yes, please. Okay.

Ladies and gentlemen, please stay connected while we reconnect the management. Ladies and gentlemen, thank you for your patience. The line for the management is reconnected. Ma'am, you may go ahead.

Should I start from the beginning?

No ma'am. You may continue from where you stopped.

Yes. Okay. I was talking about asset quality. So gross NPA reduced by 98 bps Y-o-Y to 3.85%. Net NPA improved by 26 bps to 0.82%. Provision coverage ratio increased by 88 bps to 93.42%. Credit cost stood at 63 bps and the slippage ratio improved to 89 bps. Let me just give you the update on the guidance that we had made to the market. While profitability and asset quality metrics remain in line with our expectations, there has been a moderation in the business growth this quarter. This is largely due to our conscious decision to shed high-cost wealth deposits, which impacted terminal growth numbers. As a result, deposit growth has moderated to 3.8%. However, our growth in advances has also remained at 5.9%. In terms of averages, both deposits and advances grew sustainably Y-o-Y by 7.6% and 10.9%, respectively, reflecting resilience in our business expansion. We now anticipate achieving growth closer to the lower end of our guidance for deposits and advances. The other highlights on our guidance. NIM for the 9 months ended December 2024 stood at 2.94%, well within our guided range of 2.8% to 3%. Notably, on Q-o-Q basis, NIM improved by 1 basis point. GNPA, which is currently at 3.85%, is already below the 4% FY and target achieved ahead of the schedule. With regard to slippages and recovery, gross slippage for the 9 months stood at INR 9,506 crores, and net slippages are around INR 8,941 crores while gross recoveries reached INR 10,789 crores, aligning with our annual guidance and demonstrating our commitment to maintaining recoveries consistently higher than slippages. I will now give you a brief on significant developments during the quarter. The bank has opened by 5 Nari Shakti branches in Bangalore, Chennai, Jaipur, Mumbai and Vijayawada on November 9, 2024 by the Honorable Finance Minister with the aim to support women entrepreneurs and provide tailored resources to foster growth and job creation. On our 106th Foundation Day, we launched several innovative initiatives, including the Union current account STP, Union Digital Contact Center, Union MSME Superfast STP, Union CBDC Accessibility Initiative for the Visually Challenged and the Union Green Home initiative. We have added 146 branches in the current financial year, taking the total branch network to 8,574. We have expanded our clientele by opening 32 lakh CASA accounts in the first 9 months of FY 2025, including 2.42 lakh premium accounts. To conclude, the bank remains steadfast in navigating challenges while delivering sustainable growth and value for stakeholders. With a focus on innovation, operational excellence and customer-centric initiatives, we are confident in our ability to drive long-term success. Thank you, and I look forward to your questions.

[Operator Instructions] The first question is from the line of Jai Mundhra from ICICI Securities. With no response, we move on to the next participant. Next question is from the line of Ashok Ajmera from Ajcon Global.

Good results, ma'am. As you yourself said on the performance of the bank is concerned on the asset quality side and even to a great extent on the recovery targets also. But ma'am, we are really going down on the business front, both deposits and credits. And our performance is a little lower than other, especially the PSU -- PSBs, which have declared their results. I mean we are much below them in this 9-month performance. So now some people have started a little bit downgrading our stock and our future prospects. So I would just like to know, though you touched upon in this opening remark, you yourself said that our business growth is lower than the target. But going forward in future, not just in 1 quarter of the -- remaining quarter of this FY '25, but what do you think? I mean the previous levels or the targeted levels will come back again soon or there is really a major slowdown in the economy and the growth path, and we may not regain the past glory again? So my first question is on that, ma'am.

Regarding the macroeconomic landscape, our economist will let you -- give you a brief. But however, as far as the bank is concerned, as I told you in the beginning with my opening remarks, we are committed to a sustainable growth with a balanced focus on top line and bottom line numbers. Our strategy, of course, as I've been mentioning in over the quarters, we [Technical Difficulty] profitability rather than [Technical Difficulty] growth. My total or the bank's total focus is to create long-term value creation for the stakeholders rather than making small glories. Now if you look at the way we have done it, we have shed almost like more than INR 30,000 crores in bulk deposits to improve our cost of deposits number and see that our NIM is not impacted. The deposit growth moderated. We had -- strategically, we reduced the number. We shed those numbers bulk deposits, and many things that the bank has taken is to drive home the point that we are looking at sustainable numbers and not a small blip in whatever we do. And I will now ask Kanika to give you a brief on the overall macroeconomic scenario.

Thanks a lot, Ajmera ji, for the question. So as we speak, first and foremost almost, of course, we acknowledge your concern. But if you look at every banker on street and they've come out with a post-analyst call, one stream of thought is very clear that the macro environment is very challenging, sir. And if you see same period last year, when we would have had this call, we would have said that you know at least for the next 12 months, even RBI was talking about a growth number of 7%, 7.5%, they downgraded it to 6.5%, government is at 6.4%. So the RBI and the government both have also acknowledged that there is a growth slowdown in the economy and the economy needs some oiling in that regard. So second point is just on the macro front, so what is the concern is that the nominal GDP growth for 2 consecutive years is below the double-digit mark. And in an economy like India, nominal GDP growth drives credit growth. So credit growth same period last year was 15%, 16%, excluding the merger effect. Now it's trending at 11% to 12% number. So there has been [Technical Difficulty] in terms of credit growth number versus [Technical Difficulty] global economic uncertainty also remains, which has got exacerbated under Trump 2.0 since November. So last point, from banker's perspective and why is it -- why the economy and not just that the financial system needed some oiling is on the liquidity side, sir. Same period last year, we kept talking about deposit growth being higher than credit growth. We needed structural liquidity. Then post Trump 2.0, we got some INR 5 lakh crore of outflows on account of FX. So we started -- there were a lot of concerns raised. Of course, liquidity came under pressure. And in that regard, I would say now ending on a positive note and an optimistic note in terms of outlook, sir. And we're making sure that it will hold something good for our bank as well. So RBI, yesterday with the kind of state of liquidity measures they have given, are signaling that they are paying heed to our bankers' liquidity woes. And INR 1.5 lakh crores is a big amount given. On the other hand, sir, now from the budget also, we expect that while the government stays committed to road map, they will do something more when we will get the economy [Technical Difficulty] some incentives coming in to boost overall growth that will lead to more business growth and eventually bank credit growth as well. So something to look forward to, in fact, in the next 10 days itself, sir. Thank you. Thank you so much.

Ma'am, my second question is on the income side. The noninterest income and especially the recovery from the written-off accounts, yes, I mean, that is some area, the overall recovery plus recovery from written-off account plus other components of the other income. There, I think, if you can give some picture that at least like on profitability front, like this operating profit also this quarter was a little under pressure. So going forward, do we have some more chances of [Technical Difficulty] other income includes recovery from the written-off account, treasury income and some other components of the income?

Yes. So on the noninterest income side, Ajmera ji, as you are aware, we have been showing a consistent growth, so our year-on-year growth is about 25%. Our core fee income is up by about 26% year-on-year. Treasury income is also growing nicely at about 23% year-on-year. Recoveries, again, have shown a higher trend year-on-year, so that's at about 32% higher. So you can see that we are looking at various fronts as far as our noninterest income is concerned in terms of trying to get the maximum out of that. And we are quite comfortable that we will be able to show a similar trend going forward. So that is something that we continue to focus on and will continue to show growth going forward.

Some color on the NCLT account and NARCL or other asset recovery companies sale of the assets recovering some good amount on that in this quarter so as to make this year at least a good year from a profitability point of view?

Ajmera ji, I am Sanjay Rudra here. In NCLT account, this quarter, our recovery is slightly low as compared to the last year December quarter. We are able to recover INR 294 crores in NCLT accounts as against INR 1,674. But in the current quarter, we are hopeful that some improvement will happen. As far as the ARC sale is concerned, last year, the number was 0, but this year, it has improved and it is INR 344 crores. So if you see the total guidance, which we have given for INR 16,000 crores of recovery for the current financial year, out of that, already we have achieved almost INR 10,800 crores -- INR 10,400 crores of recovery and the balance amount of INR 5,500 crores recovery will happen in the current quarter. So we are very much focused that we will be able to meet the recovery target. And already, the write-off recovery is better than last year. We will see that it improves further, which will add to our other operating income -- other income -- which will add to our other income.

Sir, this INR 345 crores is the total recovery? I mean out of this, only 15% is the cash component, isn't it this asset recovery company...

No, no. That is slightly different. Now the ARC itself, we are not looking for any SR. It is on a pure cash basis, so this [Technical Difficulty] full recovery on cash basis.

Cash basis, okay.

Next question is from the line of Aditi Nawal from RSPN Ventures.

I have a few questions. First, with respect to the interest on RBI balance, other bank balance line item, so that has dropped significantly Q-o-Q as well as Y-o-Y. So anything that you'd like to call out on that line item?

Yes, ma'am, this is mainly because of the shedding down our bulk deposit and liquidity tightness. We have not done much arbitrage activity, that is why it has come down by INR 187 crores. Otherwise, it is on par with earlier quarters also. If the liquidity improves and opportunity comes up, definitely, we will have it and improve our performance in that cash balance only.

Got it. Sir, and second question was with respect to the effective tax rate, this quarter came down to around 21%. So is there any tax reversal or anything that we've got there?

No, obviously, we keep revisiting our income tax provision from time to time. So you see that on an average, our effective tax rate is about 24% to 25%, which is in line with what the regulations are in terms of income tax. So it is just that this quarter, we just revisited some of our estimates, and that's the reason why you see an effective tax rate of 22%.

Got it. And sir, just one last question on the SMA. So SMA-2 has increased from INR 1,664 crores in September to INR 5,500 crores in this quarter. So is it that same account that we were referring to last quarter, which was an SMA-0, which -- around INR 5,000-odd crores, and that has slipped into SMA-2?

Yes, this is only one account actually, which was in the SMA-2, which also we earlier told that we already made the adequate provisions also. In standard asset, we have to rate the provision. But for your kind information, as of today, the amount is recovered.

Okay. So this amount will go back to being standard in the current quarter.

Yes.

Next question is from the line of Rakesh Kumar from B&K Securities.

Can you hear us?

Yes, we can hear you.

Yes, ma'am. So the first question was with respect to the interest income accrual due to the recoveries. So I think that number previous year was approximately INR 3,065 crores, and that number has fallen to INR 1,750 crores in the 9 months. So any comment that you can offer or any clarification that you can offer, ma'am?

Yes. For the last year, for 9 months, recovery was around INR 2,223 crores and full year, it was around INR 3,065 crores. But this year in the first 9 months, our recovery is only INR 1,738 crores, which is almost INR 500 crores sort of last year numbers. But we are working on that, and we are hopeful that the recovery of the interest will also improve. But interest recovery on NPA account is not through the OTAs because we have a policy wherein whatever the recovery comes through the SARFAESI and all is first adjusted towards the recovery of interest. So last year, actually, SARFAESI action was more effective. This year, we have done some of the sales, but the realization has not yet happened, which will effective in this current quarter. So I'm hopeful that, that number will also improve and we'll be able to meet our expected number of around INR 2,500 crores for the current quarter.

And secondly, ma'am, with respect to our discount rate on the AS 15 estimation, we have, I think discount rate at 7.5% as on March '24. I'm not sure if we have changed that number during the 9 months. If it is the case, kindly clarify. And with the 10-year just say having come down to 6.7% and around, would we have to reduce the discount rate for the AS 15 calculation in the March quarter? And if that is the case, how would the terminal benefit obligation number would look like in the fourth quarter employee expenses number, ma'am?

Yes. So on that, on the AS 15 assumptions, we are in touch with the actuary. So even for the December quarter, we did speak with the actuary before looking at what numbers should be booked. So we have taken into effect what the actuary told us. We will again revisit this in March and finalize the numbers, but we're quite comfortable with the numbers that we booked based on the discussions that we've had with the actuary. And no change in the assumptions right now.

Sure, sir. Just one last question, sir. Our credit growth guidance was 11% to 13% and ma'am mentioned that we were looking at lower end of the band, guidance band. We have done 5.6% in the 9 months. So are we expecting that another 5% we can do just in 1 quarter, in fourth quarter? Would it be feasible in this market?

See, even though my terminal numbers, if you look at the terminal numbers, my gross advances is at 5.9%. That's about 6%. But if you look at my average number growth, it's almost like 10%. That is the way the advances numbers have grown. I also have a pipeline of about INR 75,000 crores sanction limits with me. And out of that, spending for disbursement is close to about INR 36,000 crores and pending for sanctions is around INR 39,700 crores. We're getting very good traction from real estate, road, power, data centers or other such centers. My RAM portfolio is equally quite aggressive, and we are hoping to grow good numbers, and plus with the kind of stance that RBI has taken, so we hope to improve the advances portfolio also in this quarter.

Next question is from the line of Mahrukh Adajania from Nuvama Wealth.

I had a few questions. Firstly, last quarter because there was a big slippage of a lumpy telecom account, there was a sharp reverse -- there would have been a sharp reversal in interest income as well, right? And even with that, so -- which wouldn't have been in this quarter. So even on that base, our NIM has declined on lower growth, right, obviously, because of tight liquidity and as you explained, recovery interest being lower. But given that now, possibly neutral liquidity may last, and maybe the theme for the future quarters. Do you expect your NIM to recover from current levels? I know your full year guidance, but this is just like a discussion from the current quarter to where we see NIMs going ahead, right? Because maybe the tight liquidity impacted NIMs. But do you see it recovering because last quarter itself, there was a lot of pressure from a big NPL. And also if you could call out separately the arbitrage income this quarter versus last quarter. My first question.

So we have guided for the NIM of, if you remember, 2.8% to 3% for FY '25. Our current NIM for December quarter is at 2.91%. And if you look at Q-o-Q, we have improved our NIM by 1 bps. And this is because we have maintained our cost of deposits, our yield [Technical Difficulty] also improved by about 8 bps. We have taken a lot of measures. We controlled and efficiently managed our bulk deposit. On the yield front, also, there was an increase in average advances. All this has helped us in keeping the NIM above whatever the numbers that we had given. So going forward also, I do not want to change my stand of 2.8% to 3%. There will be -- we're looking to improve our NIMs to further amount -- further numbers.

As far as arbitrage is concerned, due to the tight liquidity condition and shedding of our bulk deposit, we took a little arbitrage opportunity. As and when this quarter if liquidity eases happen and we have a surplus fund, definitely, we will look for a better opportunity and increase the arbitrage income during this quarter. It is hardly down by INR 180 crores only.

Sorry, it is?

INR 180 crores only down.

INR 180 crores lower than the last quarter?

Yes, yes.

Okay. Okay, got it. And what would be the reversal on interest income last quarter and this from NPLs?

It's not much of reversal. It is a very miniscule number that we have been able to reverse.

A reversal as in on NPL?

Yes, very small number.

But last quarter, it would have been a bigger number?

So yes, I mean it's almost the same, Mahrukh, quarter-on quarter. So if you look at the December quarter, the dummy ledger recovery was [indiscernible]...

Reversal, yes, not much numbers.

It is very small, but Mahrukh, I'll give you that number offline.

Okay. And then just a clarity on that SMA thing, which is already being recovered. So I guess in last quarter's discussion also, we said that the SMA -- the lumpy SMA loan was upgraded, so after it got -- at the time of last quarter results. So after it got upgraded, it got downgraded again and now it's paid. Is that the way to look at it?

No, no, no. See, last quarter, also, see, that was continuously in SMA actually speaking. Sometimes it goes to SMA-2 also. That's what has happened in December. But as you know, that we all know the quote, so because of the some funding from equity has come and the overdues with other banks as of date have been fully cleared by the company.

Next question is from the line of Jai Mundhra from ICICI Securities.

Just on this SMA, so did I hear it correctly that the exposure itself has run down now, right? Or it is just that the account has become normal?

No. That's what, the overdue only have been run down. Exposure still remains. Overdue has been fully cleared.

Right, right. Okay. And ma'am, on your loan growth, right, so somebody was also asking that even if you were to match your loan growth guidance at the lower end, it will be a steep ask. You mentioned that you have a decent corporate pipeline sanctions and amount to be disbursed. But again, then you will also face the same challenge, right, that the cost of deposit is still hard, and you may have to fund those corporate loans by TD or maybe bulk, which will not help on the margin front. So I mean what is the way out, in the sense that it looks like the catch-22 situation that CASA growth is not happening, and hence we are not growing corporate as much. So that may continue for a while, right? Is that the understanding? Or how do you want to get out of this?

See, if you look at the way we have done in this quarter, we have consciously reduced our bulk, which is at a higher cost. And also, if you look at my average, advances growth has also remained quite good at 10%, 10.5%. And now looking at the pricing, on most of my advances that's on the book now is at MCLR pricing and not at the T-Bill pricing. So as and when there is a requirement of fund, we have also seen a good growth in my retail deposit front where I have seen some good growth happening in the last 9 months, so the various steps that we have taken, my retail term deposit has also grown by about 8% and with an absolute growth of about INR 36,000 crores. And with this also and with a little bit of easing of liquidity measures that the Reserve Bank of India has also taken, we are sure that we will be able to fund our advances growth.

Okay. And ma'am, if you can comment on...

Yes, go ahead.

So Jai, so here two points. First of all, it's not as if bankers are in a catch-22 situation. Even from the macro perspective, you know that everybody is looking at different sources of funds because even now, credit growth is a little higher than deposit growth. And of course, if I did accounting for funds, apart from deposits, everybody is looking at alternate sources of funds. We also have our own avenue for those index funds. Second, as liquidity eases and RBI signaled they are on a path to monetary easing because they also want to contribute, in fact, do the heavy lifting on growth. So when the cycle switches, we all know that we will get some salutary effect on CASA as well in the coming months. It may not be as much because of shift in savings profile. So first, alternate sources of funds, we are also looking for some. And second, on CASA, maybe some salutary relief in the coming months as the cycle shifts. Thank you.

Yes. And actually, the broader point I was trying to understand was this NII growth now has become 1% Y-o-Y, right? And assuming no rate cuts change -- I mean, no change in the rate cut, do you believe it will remain like this only, I mean, without any policy action? Or do you think it can inch up maybe...

See the main source of the bank comes from interest income, NII only. And we have seen a little bit of growth Q-o-Q also and Y-o-Y in our interest income. And with the easing of the liquidity numbers and with the yields coming down probably with the rate cut, we are sure that we will be maintaining our [ net interest income ] with the higher positive growth in our advances. That's one thing. But if you look at the bank is also doing very well in the noninterest income part, we have shown a very good growth, almost 17% in the last 3 months and Y-o-Y growth of about 25% in our noninterest income. Core fee base income has also grown by about 26%, and recovery income is also -- recovery in written-off accounts, dummy ledger recovery, all this will also factor in, and we hope to keep our net interest income at a steady growth phase.

Right. And ma'am, secondly, on SME and agri, right, so while corporate may have very fine pricing, but SME and agri, the largest PSU bank is delivering very steady growth on SME and agri both, other private banks are also delivering. What is actually impacting the slower growth in both these two segments?

I will tell you about MSME, of course, the growth has been muted because of two factors. One is, of course, many of my -- about INR 5,000 crores of my MSME book were upgraded to my mid-corporate segment. They were moved into the corporate because of the turnover and the other issues. And then secondly, about -- close to about INR 12,000 crores of my MSME book, we had to declassify because of URN number not happening. So these are the two reasons because there was a little bit of rundown on my MSME book, which I'm sure that we will be able to make up during the current year. With regard to the agri portfolio, it is showing a good growth now. As of now, the season has started picking up. We had a lot of -- many governments coming up with debt waiver and all those things, and that is why there was no growth in my agri sector and which we hope that we will be able to do during the current quarter.

And this MSME reclassification was during the quarter, right, or it was at the beginning of the year?

Yes, it was during the quarter, December Q3 quarter, it was done, declassification, declassification and upgradation.

Right, right. And ma'am on gold loan, if you can quantify how much is your total gold loan, how much is agri gold and how much is retail gold? And is there any impact because RBI has revised the gold loan circular asking for product changes, a lot of changes on LTV and maybe the rollover and renewal policies.

Yes. The total gold loan portfolio is [Technical Difficulty], out of that agri gold is about INR 60,000 crores. And of course, yes, RBI has come out with the guidelines with regards to LTV for both agriculture and non-agriculture loans. We are yet to feel the impact of those guidelines by the RBI. But however, we have been doing well. We have opened large number of gold loan accounts during the last few quarters. And we hope to match those numbers, and the portfolio will grow in a very healthy manner.

Ma'am, I have one more question on PL, personal loan, unsecured personal loan. How much is the exposure? And what was it last quarter? I mean how it has grown in the last 1, 2 quarters and if you had...

Well, unsecured lending to personal loans is about INR 12,800 crores, not much of a variation here. In fact, we have -- if you look at Y-o-Y growth, it has actually declined by almost 1%. So there has been a degrowth in my personal loan portfolio.

And if you have the GNPA number in this book, the outstanding GNPA or it will be more...

Yes. The NPA number stands about 1.8% in this personal loan segment.

Sure. And then lastly and the last question ma'am, if you have the SMA number for MSME because there was some, let us say, concern in the SME portfolio for banks. If you have the SMA-1 or SMA-2 figure for MSME portfolio on the entire bank for this quarter?

Do you have the numbers?

SMA number for MSME is around INR 9,900 crores as a whole. And SMA-1 is INR 3,500 crores and SMA-2 is INR 4,600 crores.

Next question is from the line of Ashlesh Sonje from Kotak Securities.

Ma'am, first set of question is from the deposit mobilization front. You have run down the bulk term deposits this quarter. How much of it -- do you think there is scope for further rundown here in this book?

We have run down around INR 30,000-plus crores and brought down the percentage to 25.02%. That was a conscious call taken. We continue to have to stick to the 25% portion is from the bulk side.

Got it. If I look at your deposit growth for the year, that is 9% to 11%, but YTD growth is negligible. Do you think you might have to hike your term deposit rates to garner more deposits for the rest of the year?

That is because of the shedding down the bulk deposit. As far as retail segment is concerned, it was at 8.5% level, and that is continually doing pretty well. Only because of shedding the number of bulk deposits, the percentage has come down.

Got it. Do you plan to hike term deposits? That was the question.

Our rates are very competitive compared to other peer banks. We'll look into the other bank's competitiveness. If required, we may look for.

Okay. Got it. And sir, secondly, on the recoveries...

Just to add to that retail term deposit, if you look at it at, our last year, our retail term deposit during the 9-month period, that is from April to December, the absolute growth was INR 6,500 crores. And during the current year, that is from April to December '24, the growth is -- the increase is around INR 22,000 crores. So we are already -- our rate is very competitive in the market, and we are growing in the retail term deposit.

Got it. Sir, secondly, on the recovery front, you have guided for INR 16,000 crores for this year. And you indicated that you expect to achieve it. Do you think you have a pipeline which is large enough to do a ballpark similar recovery in the next year?

The portfolio of the recovery amount is coming down year-after-year because last year, if you see, we have recovered INR 18,000 crores. This year, we are targeting for INR 16,000 crores. After this also, we have a portfolio, but recoverability will come down. So we'll take a call in the month of March, what will be our target for the next financial year.

INR 80,000 crores.

Yes. And majorly, the majority of accounts, almost INR 80,000 crores -- INR 65,000 crores to INR 80,000 crores is in NCLT, but the regulations are very slow pace. So that also will be one of the guiding factor for recovery for the next year.

Okay. And just lastly, you shared the GNPA ratio in the personal loans book at 1.8%. What was this number last quarter?

It remains at the same level, 1.8% to 1.9%. We are not growing that aggressively in this book.

Next follow-up question is from the line of Ashok Ajmera from Ajcon Global Services.

Ma'am, my question was a little bit more again on the business development, like credit and deposit side, a little more in retail, like, what are we actually looking at? What is our pipeline is showing as far as the credit is concerned? We have, I think, the renewable energy credit facility of about INR 27,269 crores. So are we looking for more opportunity in this renewable energy side? What is our sanctioned undisbursed pipeline you're saying and the proposals which are not yet sanctioned but are in pipeline you're saying? Because we need to start worrying about the growth. Deposit side, I mean you are comfortable as far as your CRAR is concerned. You also have extra SLR. I mean you can raise the funds also, but on the credit front because in order to maintain the profitability of the bank on a continuous basis, you need to grow your loan book. So where are the opportunities you are looking at? First, on which areas you are giving the main thrust? And is there any stress started showing in the renewable energy space also?

Yes. We have almost -- as I told earlier also, we have got almost about INR 75,000 crores pending for disbursement and sanctions. Out of the INR 75,000 crore, INR 36,000 crores is pending for disbursement and INR 39,000 crores is pending for sanctions at our end. We have sanctions under roads, power, real estate, iron and steel, cement, renewable energy, EV, semiconductors. We have got so many sectors under this, the loan has already been sanctioned. Now renewable energy also, we get lot many proposals. But the bank is very clear that if you're getting it at a good pricing on the rating or the promoters are good, only then we take up these kind of industries. We just do not want to grow for the sake of growing. But whatever meets our bottom line, that is the way the bank wants to grow. And I have told you at the beginning only that we are committed to a sustainable growth with a balanced focus on the top line and bottom line performance. And with the kind of strategies that the bank has taken in the last few quarters, we have shown a good bottom line performance exceeding the market the way the market is thought about. We have taken up lot of initiatives to improve our performance in the advances sector also. And we hope to continue with those kind of practices, which will help us in a sustainable growth, but also the bottom line of the bank is also adequately taken care.

Okay. I mean so basically, if the things a little bit improve in the overall economy and if you become a little positive, you have scope for immediate INR 26,000 crores of this, which is already sanctioned and on disbursement and you have another strong good pipeline, of course, providing you -- meeting your criteria. Having said that, my next question, ma'am, in this round is on a little bit of clarity on this taxation DTA number. So how much more is left? And can the CFO give a little color? Like in this quarter, it was, I think, INR 1,289 crores as compared to last quarter of INR 1,681 crores, the taxation, including DTA. First of all, in 9 months, it is INR 4,321 crores as compared to previous 9 months of INR 5,919 crores. So going forward, in the March '25, because the taxation ultimately affects our bottom line, even though we don't have to pay actual tax so much. So can you please throw some color on that, that what is actually is going to be FY '25 color figures on the taxation on the DTA -- including DTA?

See, the way generally as to provide the DTA, the provisions, the work is that the provisions for taxation and DTA kind of offset. So for instance, we will obviously look at as we increase the amount of write-offs, that would have some color as far as our DTA is concerned. I will not be able to give you exact numbers as far as DTA is concerned, but maybe I can discuss with you offline in terms of how our DTA book is panning out. But I won't have numbers right now with me in terms of what the March 2025 DTAs would be.

It is okay offline. What is the total amount left now?

Total amount is about -- roughly about INR 2,175 crores of DTA.

Okay. That is to be taken care of in the coming quarters, isn't it?

So not necessarily coming quarter, in the coming quarters, yes.

Quarters, quarters only?

Yes.

All right. Ma'am, last question is on the buffer provisions. Have you used some of the buffer -- the addition provision on the standard assets, I think which stands about INR 550 crores something now? Is there any addition in this quarter in this? Or have you used something out of the existing buffer which we had or more than the IRAC norms provision if any, which is there still?

So we are making standard asset provision in line with the regulation, so we don't -- I mean what we monitor is how are we comparing ECL versus what we are holding in our books right now, and they were very comfortable. So we're not necessarily maintaining additional buffers as far as our standard asset provision is concerned.

It is written in the note to the accounts that as a prudential measure, not that as an IRAC requirement. If you read the note, it says additional provision on standard asset as a prudential measure, not on a prudential basis. So definitely, it may be planned as per the guidelines...

Yes, yes. But Ajmera ji, that is referring to the provision that we made in the June quarter. If you recollect toward standard asset provisioning, so that we are still holding because only one of those accounts moved to specific provision. The balance still stays there, and that we will revisit as the quarters go by.

Yes. So my -- basically my reason for asking this question was whether in the coming quarter, it might get totally reduced or a decision may be applied on this? Or it may take some more time?

No, we don't expect this to -- because obviously, it can get reallocated to other NPAs if required. So I would not say that it will reduce in the coming quarter. We will obviously revisit it as and when development takes place.

Okay. If you permit ma'am, something on the digital front, on the digital journey, because when the moods were down, the business a little bit down and this thing, I mean, little bit reduced our efforts toward that. So can you throw some light on the digital journey, whether it is as per our plan? What kind of spending, which we have done already now this year and what do we plan to do?

Yes. In terms of our digital transformation journey, in this quarter, in the December quarter, we have actually launched our platform with 7 journeys as of now. And in terms of other standalone journey, obviously, there are 17 journeys are already live and there is business which is being done. So if you look at the number, basically around INR 18,800 crores amount of digital lending we have done, and there are around 5.26 lakh accounts we have opened and renewed. In terms of our liability side of it, obviously we have opened almost 1 lakh plus digital accounts through that. In terms of our journey, particularly digital channel, which is our zone, almost like 3 crore customers were onboarded on this journey, this platform. So as far as the bank is concerned, we are on track in terms of our digital transformation journey. There are journeys which are going to come by this quarter and thereafter. So we are on track as far as our digital transformation plans are concerned.

Next question is from the line of Aditi Nawal from RSPN Ventures.

I just had one question on the asset quality front. So on Page 17 of your PPT, I can see that as LC and others where the slippages have been very miniscule this quarter. However, the outstanding GNPA has increased by around INR 2,000-odd crores, and the percentage has also increased. So can you just provide some color on as to how this is working, kind of your slippages are very less but your GNPA has increased quite a bit?

So actually, you are talking about this, the increase in the NPA numbers.

LC and others.

Yes. I told you in the very -- when I was addressing the MSME issue, I was talking about how about INR 12,000 crores -- INR 13,000 crores has been reclassified as -- from MSME book out of that because of the URN number not available. And out of that, close to about INR 7,000 crores are NPA, which as you know from today, it was actually in the MSME segment because there was no URN numbers available, it has been declassified and that is how it is showing under LC and others.

Okay. So even the GNPA gets reclassified?

Yes.

Next question is from the line of Rakesh Kumar from B&K Securities.

Just one question I had, ma'am. So like in the first half, what we had seen is that, core retail deposit growth as per the LCR definition and classification was around 4.5%. So now even retail term deposit growth has been close to around 8% number. But how is the number as per the LCR? If you can throw some light because that would be important from the LCR perspective and the balance sheet growth perspective.

Our average LCR has been in the range of 130%. So earlier, it was a little higher than 130%, but 130% is still very comfortable number for us. Even under the new guidelines, it will be well above the regulatory and our internal policy limit.

No, no, sir. I was -- that could have happened because we have reduced the wholesale deposit composition this quarter on a sequential basis, so that could have positive repercussion on the LCR number. The core retail deposit growth, which is very crucial for sustained LCR number and for your this thing also, for the balance sheet growth also. So that number was around 4.5% in the last quarter. How that number looks like this quarter?

We have to come back on this -- we will come back on this number calculation.

Thank you very much. Ladies and gentlemen, that concludes today's conference call. On behalf of Union Bank of India, we conclude today's conference. Thank you for joining us, and you may now disconnect your lines. Thank you.