South India-based private sector lender City Union Bank (CUB) has said it will start boosting growth in non-gold loan advances by the end of the current fiscal year. In recent quarters, due to the Covid pandemic and in the absence of other avenues for growth, the bank had made efforts to improve gold lending, which has been increased by 73% from Rs 4,537 crore in the second quarter of fiscal 21 to Rs 7,849 crore in the second quarter. Exercise 22.
N Kamakodi, managing director and CEO of CUB, recently said on a conference call with analysts that when growth in other credits increases, growth in gold lending will also decrease.
âWe haven’t pushed our growth pedal in non-gold lending credit. We should probably start this at the end of the exercise if all goes well. When the growth of other credits increases, the growth of gold loans will also decrease, which is how we have managed growth in the past, âhe said.
Currently, all rural and semi-urban branches of the bank have a gold loan as a product. As for metro branches, maybe only 10% of branches will have gold lending products. Out of a total of 700, 350 to 400 branches may have gold lending products, he said.
On the recovery front, Kamakodi said in the first half of FY22, the bank had recorded a total recovery of Rs 290 crore comprising around Rs 210 crore from actual accounts and around Rs 80 crore from real accounts. of technically written off accounts, compared to Rs 108 crore. including Rs 72 crore of actual account and Rs 36 crore of accounts technically written off during the first half of fiscal year 21.
In the second quarter of fiscal 22, it recorded a total recovery of Rs 189 crore including Rs 128 crore from actual accounts and Rs 61 crore from technically written off accounts.
âThe recovery for the current quarter is the strongest in recent years, but needs to improve further from here. The recovery will determine the ROA over the next two years, so we are taking all measures under our command to improve this in the future, âhe said.
Total provisions made in the second quarter of fiscal 22 and the first half of fiscal 22 was Rs 223 crore and Rs 433 crore compared to Rs 227 crore and 429 crore in the second quarter of fiscal year 21 and H1 of exercise 21 respectively.
He said that after Covid, only 4% to 5% of transactions have gone through branches, creating huge capacity once the pace of growth picks up.
Regarding network expansion plans, he said the bank keeps plans for around 50 branches every year. âWe only opened around 3 branches in fiscal 2021 and this year we could probably open around 25 branches. This is what we expect if all goes well and we could start opening around 75 branches next year, âhe said.
Kamakodi said the bank will also look at the co-lending space, stressing that it will do so on its own terms by identifying a suitable partner, going through a small portfolio, testing behavior through cycles before lending. ‘expand and consider it as one of the main growth axes.
âWhat I can say for sure is that for the next three years we would certainly have started co-lending, but it won’t be a very large proportion of our overall portfolio even in three years. we will have total comfort and control over the performance of this segment and the degree of control we have over this portfolio, we will take another call on that, âhe said.