Union Bank to sell 8 NAP accounts worth Rs 3,000 cr to NARCL

Mumbai: Union Bank of India on Friday said it has identified eight troubled accounts worth Rs 3,000 crore to be sold to the national bad bank National Asset Reconstruction Company (NARCL) this fiscal. The lender has more than doubled its net income at Rs 3,236 crore in the June 2023 quarter on improved asset quality and recoveries.

The city-based bank had already sold three accounts worth Rs 900 crore last fiscal to the national bad bank at a recovery of 33 percent.

"We have sort of identified as many as 42 troubled accounts with an outstanding of Rs 10,000 crore to be sold to the NARCL. Of these, we hope to sell at least eight of them to that central government-owned bad bank this fiscal", A Manimekhalai, the chief executive and managing director of the public sector lender, told reporters at the bank's post-earnings presser here.

Union Bank was one of the first lenders to sell its NPAs to NARCL in the first lot of the bad bank's such transactions.

The bank had recovered Rs 20,000 crore from written-offs/upgrades or one-time settlements but this year it will be around a quarter of that only, she said as the overall quantum of bad assets has fallen drastically.

Of the Rs 20,000 crore, cash recovery alone was Rs 5,500 crore, which it expects to fall to Rs 4,500 crore this year.

The bank's overall gross bad loan ratio is came down by 288 bps to 7.34 per cent (Rs 60,104 crore) now and net NPAs by 173 bps to 1.58 percent (Rs 12,138 crore), and hopes to bring it further down to under-6 per cent by March, she said, adding as a result, provisions for bad loans came down to Rs 1,984 crore from Rs 3,653 crore.

Manimekhalai also said the bank will be raising Rs 10,000 crore in equity capital not to buffer up its core capital base but to meet the Sebi mandate of having a 25 per cent public float.

Of the planned Rs 10,000 crore capital raising, Rs 8,000 crore will be equity capital and the remaining will be tier 1 & 2 capital. We are more than adequately capitalised. This fundraising is to meet the 25 percent mandatory public float, she explained.

The government currently holds an 83.49 per cent stake in the bank, which has to be brought down to 75 percent under the Sebi's listing rules.

The core capital stood at 15.95 percent from 14.42 percent of which CET 1 (Common Equity Tier 1) stood at 12.34 percent from 10.68 percent, she said.

The bank's profit rose 107.7 percent to Rs 3,236 crore from Rs 1,558 crore on a steep fall in bad loans and an improvement in interest income.

The total income rose to Rs 27,381 crore from Rs 20,991 crore in the same period a year ago, of which interest income improved to Rs 23,478 crore from Rs 18,174 crore.

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