MUMBAI: Battling slow business and muted credit growth in the last financial year, Union Bank of India through cost saving measures managed to save up to 26 basis points, or about `500 crore for its balance sheet, Chairman and Managing Director Arun Tiwari said here on Tuesday.
Last year was exciting and challenging, said Tiwari. The bank initiated conventional and unconventional measures and was vigilant to save and plug any potential wastage.
“Whenever capital availability is scarce the tendency is to conserve capital and that’s what happened,’’ he said. As part of the effort, the Mumbai-based lender also increased its focus on lending to retail, agriculture and small and medium enterprises, and reduced lending to corporate sector. Advances to retail, agriculture and MSME sectors grew at almost 30 per cent in the fiscal just ended, while growth in loans to the corporate sector was quite muted, he said.
During the current financial year, he expects credit to pick up from the third quarter, initially for working capital and later for brown-field and then green-field projects. Banks have to make lesser provisioning for retail loans because of lower risk weights, which make lesser demand on a bank’s capital, unlike the corporate loans and sectors such as real estate that are considered risky and need higher provisioning. Also, Tiwari sounded a confident note stating the bank’s non-performing loans (NPLs) peaked in 2014. The bank’s gross NPLs were 4.69 per cent in the September quarter, and 5.08 per cent in quarter ended December 2014.