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00:00 Union Bank reported skew 4 numbers as well and multiple numbers out there.
00:05 And while income may be up just about 3% sequentially,
00:11 let's hear out from the management to talk about who's talking to my colleague,
00:17 the executive director is talking to my colleague on those numbers. Let's listen.
00:20 If you are looking at our slippages, it was double what we are presently today, what we achieved it.
00:27 So actually, we have taken a lot of steps for containing the slippages.
00:31 The sequential what you are referring to is on account of, if you are looking at it,
00:36 major will be from the agriculture sector where the repayments of the seasonality depends on the repayment terms.
00:44 And these are on the every year on year basis. Also, the last quarter, we have a challenge in the agriculture sector.
00:52 But if you are looking at the actually our actual slippages, if you are seeing that out of this 11,800 crores,
01:00 around the 500 crores were the slippages which has happened of the NPAs of the previous year.
01:07 There were some developments of bank guarantees, which has led to that 500 crores increase.
01:13 And also, if you are taking into account our upgradation, which has happened,
01:17 which are doing the slippages of the slippages, which has happened during the year, the upgradations happened.
01:23 Our net slippages is 9,556 crores only.
01:28 Understood, sir. OK, I take your point. I want to try and understand this a little further.
01:35 Your agri book is roughly 20 percent of your total book.
01:39 I want to understand whether there is still some bit of of problem with regard to possible future slippages coming through in FY25.
01:50 Is that how one can look at it? And what's the kind of number that one can expect it to normalize at?
01:57 See, the agriculture portfolio is, if you're looking at it, it is around 180, around major portion,
02:04 around if you say that around 30 percent of this is from the gold loan out of there,
02:10 where we have a security of jewelries against that agriculture loans.
02:14 So I don't find, because our agriculture portfolio will be always manageable.
02:19 It depends on the climate condition.
02:22 And when there is some delay in making the payments, normally there is a slippage.
02:31 We are finding it in agriculture. But at the same time, you can look at it.
02:34 Once there is a good monsoon comes, these agricultural loans will be cleared and the farmers will be again availing the loans.
02:42 So we don't find much problems in the agriculture because being being a pan India bank,
02:48 we are also having a good exposure on all sectors of agriculture.
02:52 So I don't find any problem. This will be taken care of.
02:57 Sure. Understood. And therefore, where should credit costs normalize at?
03:01 What's your credit cost guidance?
03:03 See, presently we have reduced our credit costs. Now it is around 76.
03:08 We, though we are given a guidance that it will be below one, we will be trying to manage at the present level.
03:15 OK, understood. And so with regard to project finance, the latest draft, I understand it's a draft.
03:23 But what's the impact? What's the size of your project finance book? First off.
03:28 Yeah, if you look at it, I first of all want to say that it is only a draft.
03:32 We are yet to get to the full guidance from the Reserve Bank of India.
03:37 At the same time, if you're looking at our portfolio, around 28 percent of my corporate book is project finance.
03:46 Out of that project finance, if you say 68 percent of the projects have already been completed and we are having a cash flow from the projects.
03:57 So remaining 32 percent are under the implementation stage.
04:01 So actually, even if today it is being implemented, what our guidance has told, it is not a matter of concern for us.
04:09 We can always manage the additional provisions.
04:13 Understood. I want to break this down for our viewers a little bit.
04:17 So just in terms of the book size on a nine lakh crore book, roughly 45 percent of that book is corporate and roughly 30 percent of that is project finance.
04:29 So 15 percent of the total book is a project finance, which is roughly one point three five lakh crore odd.
04:36 If I've got my math right, sir, you are better to confirm. Understood.
04:40 And the second piece on this is what's the impact if at all the provision is implemented as is.
04:49 What's the impact like in FY25 and FY26 that you are forecasting with regard to your numbers?
04:55 How will the numbers change?
04:58 See, still our people are working on a case to case basis.
05:02 How much actually the impact will be there on that?
05:05 That is what I say when you are on an overall estimates, when we are looking at it, we don't find that it is not a very big concern and it is manageable.
05:16 Understood. And therefore, you will continue to maintain all your guidances as is.
05:21 They will not change per se from a credit cost standpoint, from a provisioning standpoint.
05:26 Yeah, we want to maintain the same guidances.
05:29 Understood. Got it. OK.
05:31 So next off is I want to try and understand what's happening to margins because margins have held up in a very difficult year.
05:38 Otherwise, I also understand your yields have gone up to support margins.
05:42 What should one expect in FY25? Because you've tempered down that margin number by at least 20 to 30 basis points.
05:50 So do you expect some deposit cost of deposit pressure to continue in FY25?
05:56 See, as you know from our economic research team, we have a feeling that the rate cuts may be delayed in the current year.
06:07 So we feel that the same pressure on the deposits are going to continue.
06:13 In basing on that, though in the last quarter itself, we are given that clear indication that the next two or three quarters will be a challenge in maintaining the margin.
06:24 So we are taking that saying that we will try to maintain between the 20 bps less we are given the guidance.
06:31 But hopefully we want to maintain the margin at the nearest to the current level by which we are there.
06:41 OK, so you're saying this is a conservative guidance and likely you will be able to hold margins above the 3% mark.
06:47 Correct. That's what we are saying.
06:49 OK, understood.
06:51 With regard to therefore, where should ROA evolve? You've currently hit an ROA of 1%, come back slightly off.
06:59 Is the ROA trajectory therefore upward because the credit cost is what is putting pressure on ROAs at least in this quarter?
07:08 Hopefully that should ebb off in FY25 is what you're suggesting and margins should hold up.
07:13 Therefore, ROA should be in surplus of 1.2%. Would that rough maths be correct in terms of my assumptions?
07:21 See, 1.2 will be very high because we were able to show this ROA, but we will be trying to maintain the ROA I think between 1 to 1.05 will be the…
07:34 Understood. And will be across all four quarters you will be able to clock the 1% plus across all four quarters. Is that the kind of comfort you have?
07:44 Yeah, I think we represent because we are also having taken very other steps.
07:49 So we are having our plans in place and we are very much hopeful that we will be able to maintain above 1.
07:56 Understood. So what's the kind of traction you're seeing in corporate? Is corporate doing well at the moment? Is there good capex coming through?
08:07 Are you seeing the capex cycle start to pick up especially on the private capex side of things?
08:12 Because we are seeing a lot on the infrasight, but is core private including manufacturing picking up in your view?
08:20 Yeah, see corporate, especially private capex cycle is long overdue for our country.
08:26 So I think now we are seeing some of the green shoots which are happening.
08:31 There are a few projects which have been announced, but I have to say that public PSUs are already in the capex cycle.
08:41 We are only expecting the private capex to pick up this year.
08:44 So we also expect that this will be there, the capex cycle, which is already overdue in our country.
08:50 It will be happening this year and we will be able to show a good growth on that.
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