United Bank aims to clock 18% loan growth in FY10: Sen

United Bank aims to clock 18% loan growth in FY10: Sen
PTI
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First Published: Thu, Mar 18 2010. 03 20 PM IST
Updated: Thu, Mar 18 2010. 03 20 PM IST
Mumbai: Government-owned United Bank of India is hopeful to achieve a loan growth of 18% in the current fiscal as against the Reserve Bank set target of 16%, its chairman said on Thursday.
“The RBI has a projection of 16% for the current fiscal. I think its quite possible to achieve an 18% credit growth,” United Bank of India chairman and managing director, Bhaskar Sen told reporters here.
Most of the state-run banks have expressed confidence to achieve an 18-20% loan growth in the current fiscal despite the low credit demand in the industry.
United Bank on Thursday got listed at the Bombay Stock Exchange (BSE) at a 17% premium of Rs77 as against an issue price of Rs66 per share. On NSE, the shares were listed at Rs74.9, at a premium of 13.48%.
Sen said the bank expects to receive Rs550 crore capital infusion from government, whose stake in UBI came down to 84.2% from the earlier 100% post issue.
“Last year, we received Rs250 crore from the government. This year, we expect to receive Rs550 crore capital from the government by end of this month,” Sen said.
Finance minister had announced Rs16,500 crore recapitalisation programme in weak public sector banks, which would help these lenders to meet their Tier I (equity) capital requirement.
With UBI going public, Punjab and Sindh Bank is the only remaining unlisted public-sector lender. Central Bank of India was the last public sector bank to get listed.
United Bank, which currently has a loan book of Rs43,000 crore, plans to focus more to grow its corporate loan portfolio in the next fiscal, which currently contribute nearly 50-51% of the bank’s total loans.
Retail loans contribute 12% while loans to small companies comes around 15%, Sen said.
Replying to an query on the proposed base rate, Sen said the bank is still working to prepare itself for the migration to the new lending model and has not calculated its base rate yet.
Recently, the Reserve Bank had extended time till 1 July for banks to migrate to the base rate system.
The apex bank proposed the base rate system instead of the existing benchmark prime lending rate (BPLR) to bring in more transparency in bank lending.
Moving ahead, the lender expects to improve its net interest margin, which is the spread between interest earned and interest expended, from the present level of 2.07%, Sen said.
The bank would also expand its branch strength by opening 70 more branches over the next few months, he said.
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First Published: Thu, Mar 18 2010. 03 20 PM IST