I feel growth will be much stronger in the second half. We will see some recovery in the second quarter but a robust recovery in the second half like last year when we covered up for the loss in the first half. We are also hoping a major segment of the population will be vaccinated by September, which will further add to the momentum. Our book is divided approximately by half between corporate and retail, agriculture and MSME. Last year, the corporate book was shrinking but the other half grew at 8%. That’s why we ended up negative. This year we expect retail growth to improve as the year goes by. We will have double-digit growth in retail and agriculture, while MSME will grow at 5%-6%. So, half of our book on average will grow at 8%. We also expect working capital loans to pick up and corporate loans to grow by 7% to 8%.
How huge could the provisioning be for bad loans?
We have projected provisioning requirements at 2%, which means it will be between ₹12,000 crore and ₹13,000 crore, whereas our operating profit will be more than ₹20,000 crore, so we have sufficient cushion. The main advantage of ageing provisions with a PCR (provision coverage ratio) of more than 80% is that all my legacies are almost provided for now. Today, I have ₹80,000 crore in cases at the NCLT with a provision cover at 97%, which means the scope to write back is much higher.
All banks, including UBI, have raised exposure to higher-rated corporates at the cost of lower-rated ones. Are banks depriving credit to those who need it the most due to risk aversion?
Yes, it is a fact that banks have moved towards higher-rated companies because the NPA percentage is directly linked to the rating of borrowers. But we still have sufficient products for MSMEs. Even in these depressing times, our MSME growth is 3-4%. Under ECLGS, we have sanctioned ₹9,700 crore and disbursed more than ₹8,700 crore.
You have integrated the other two banks. How do you see Union Bank five years down the line?
We are building to be a digital bank. Ultimately, most of the transactions will move away from branches to the digital platform. The purpose of amalgamation was to build a strong and robust bank in which we have been successful in the last one year. Our balance sheet has grown, and we have made an operating profit of more than ₹5,000 crore each quarter, which gives us the strength to deal with any losses. We have been able to adopt technology much faster, which would not have been possible if all the three banks were separate.