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Uco trims bad loans

Arun Kaul in Calcutta on Thursday. Picture by Kishor Roy Chowdhury

Calcutta, March 20: Uco Bank expects to considerably lower its non-performing assets (NPAs) in the last quarter of this fiscal after selling bad loans worth Rs 1,545 crore during the period.

However, the bank does not expect an increase in net interest margin (NIM) as credit demand remains under stress.

“We expect our NPAs to be substantially lower than the third quarter. We have auctioned off Rs 1,545 crore bad assets in the current quarter,” chairman and managing director Arun Kaul said on the sidelines of an interaction at the MCC Chamber of Commerce and Industry.

The Calcutta-based lender’s gross NPA stood at 5.2 per cent of advances in the third quarter ended December against 5.32 per cent in the preceding quarter. Kaul said the bank had sold Rs 322-crore worth of bad assets to asset reconstruction companies in the third quarter.

Kaul said the bank’s margins were expected to remain at levels similar to that in the third quarter because of a shrinking credit growth. “The demand for credit has been decreasing. The credit growth rate is around 14-15 per cent,” he said, adding that the bank would be able to maintain NIM at 3 per cent. The lender’s NIM fell to 2.83 per cent in the third quarter from 3 per cent in the second quarter.

Data by the RBI show that the growth rate of gross bank credit has shrunk from 18 per cent in 2012 to 14.2 per cent in 2013 because of a decline in credit flow to medium and large corporate houses.

Kaul, however, said public sector banks were unlikely to be impacted by competing new banks.

 
 
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