“See, ROA, actually speaking if you are looking at our previous records we have had a vision for a ROA of more than 1% in March 2025 only but we reached last year itself and we try to maintain above 1% in the coming days also, which we have taken various steps, various initiatives have been taken to improve our ROA,” says Shri Ramasubramanian S, ED, Union Bank of India.
Let us talk about how the deposit growth has been for this quarter because that is the talk of the town right now. Many banks are being able to do in a healthy manner, but some are struggling. How are deposits panning out at your place?
Shri Ramasubramanian S: Now, it is a very well-known news that the liquidity in the banking system is really a challenging one. But if you look at Union Bank of India, we have shown a YoY deposit growth of around more than 8%, though it is a little muted, but one thing we have to see that is we are also having a good liquidity in the system also in our bank where our LCR is more than 137%. So, going forward also, we will continue to have a retail growth, retail deposits to a large extent and also a focus on the CASA. Bulk deposits or wherever the high cost deposits, we will be taking it whenever we require good assets on that. Let us talk about the loan growth then. Out of retail, agri, MSME, which one is actually leading the growth as far as your overall loan growth is concerned?
Shri Ramasubramanian S: See, for us, the RAM sector is the focus area, which is giving us a good yield and advances. So, we continue to focus on the RAM sector. Retail, the growth is more than 12%. Agri is growing more than 21% that is mainly being contributed from agri gold loan portfolio.
And MSME is muted at 7.5%. Corporate, it is not a very big growth. We have been growing steadily at 8.9% and we have to understand that we also have been consciously seeing that the low yield advances are being shed away to manage the CD ratio of the bank, which is comfortable at 73%.
I also want to talk about what your asset quality is like because while this quarter we have seen an improvement come by in your NPAs and your slippages as well have come down, what we are hearing is some concerns with regards to unsecured retail or the MSME segment. Do you suspect that in the future quarters to come, these two segments could be a little problematic?
Shri Ramasubramanian S: See, one thing is that if you look at our unsecured portfolio in Union Bank of India, already you can see that regulator has already flagged off this issue in last November, December itself, saying that there is a very high growth in the unsecured sector. But if you are looking at the Union Bank of India, our unsecured portfolio including the credit card is hardly from a total more than 9 lakh advances, it is hardly 13,000 crores and the slippages in our unsecured portfolio is very limited. It is hardly 1% slippages, 64% of my personal unsecured loans are only towards the salaried people who are maintaining salary with our bank. So, we do not find much stress in this sector.
But MSME, there are some stresses are happening, especially in the lower end of the MSME sector. We are continuously reaching to them and trying to give a helping hand for coming out of the stress.
But given all of this, where do you expect your ROAs and NIMs to stabilise? The ROAs are already above the mark of 1%. What is the next target you have in mind and NIMs, is there any scope of improvement?
Shri Ramasubramanian S: See, ROA, actually speaking if you are looking at our previous records we have had a vision for a ROA of more than 1% in March 2025 only but we reached last year itself and we try to maintain above 1% in the coming days also, which we have taken various steps, various initiatives have been taken to improve our ROA.
And regarding NIMs, though the NIMs have come down during this current quarter, you have to see that it was a challenging quarter for the banking sector itself where there was a lot of pressure on the high-cost deposits, despite that we were able to see that our NIMs is maintained above 3 and presently if you are looking at our estimates for the current year, we have given a guidance of NIMs of 2.8% to 3% for the entire year.
Are you well funded or you would be looking at some sort of fundraise at some point of time?
Shri Ramasubramanian S: See, last year, we have done a fundraising of around 8000 crores, which was fully subscribed and we also got an excellent response from the market. Fundraising presently, if you are looking at our CRA ratio, it is more than 17%. But for the growth, for advances when it comes certainly we will be looking forward it. Already in principle we have got the approval from our board for raising fund to the tune of around 6000 crores in equity and around 4000 crores in bonds.
