Union Bank of India (UNIONBANK) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Union Bank of India earnings conference call for the period ended September 30, 2026. The bank is represented by the Managing Director and CEO, Sri Anish Pandey, Executive Directors, Sri Nitesh Ranjan, Sri Ramasudramaniam S., Sri Amrish Prasad, and other members of the top management. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. V.B. Sahai, Deputy General Manager. Thank you, and over to you, Mr. Sahai.

Thank you, sir. Good afternoon, ladies and gentlemen. I, V.B. Pai, Head of Industrial Relations, welcome you all to the Union Bank of India signing con call for the period ended September 38, 2026. The structure of the con call will include a brief opening statement by our respected MDNCO, sir, and then the floor will be open for interaction. Before getting into the call, I will read out the usual disclaimer statement. I would like to submit that certain statements that may be discussed during the investor interaction may be forward-looking statements based on current expectations. These statements involve number of risks, uncertainties, and other factors that cause the actual results to differ from the statements. Investors are, therefore, requested to check this information independently before making any investments or other decisions. With this, I now request our MD and CO, sir, for his opening remarks. Thank you, and over to you, sir.

Yes, you are. Please come on.

Oh, thank you, thank you. So, thanks to Mr. Sahai and to the coordinator, and good afternoon, everyone, and it gives me great pleasure to welcome all of you to Union Bank of India, your bank financial results announcement for the quarter ended 38 September 2026. With this, I have also concluded my first year in the bank, and happy to interact with you for the last four or five quarters. So, before I take you through our performance, first of all, my all best wishes on the today, Durga, Astrami, Naumi, and all festivities, which are lined up in the month of October and November. With this, let me briefly set the context and share a few remarks. So let me begin by saying that in Q2, 26-27, our country, our Bharat, our economy, and the banking sector have continued to demonstrate remarkable resilience despite persistent global headwinds. This is supported by strong domestic fundamentals, product macroeconomic management, and timely policy interventions. We need to acknowledge that the half-year, 26-27, was deeply affected by West Asia conflict, apart from only no effects and AI-led disruptions, with varied channels of impact on our macros and market via oil prices, overall inflation, trade linkages, logistics, capital flows, and market movements. I would like to acknowledge the consistent support extended by the Government of India as well as our regulator, Reserve Bank of India, both mitigating the impact of external disruptions. Major states aimed at safeguarding and supporting businesses, particularly MSMEs, have helped preserve confidence across the country in the financial system. The RBI's policy measure to attract dollar flows, including the FCNR and ECB scheme, bolstered liquidity within the banking system. As a result, the banking sector has continued to demonstrate strength with system credit and deposit growth, standing at around 19.4 and 17.8 YUI, respectively. Against this backdrop, your bank, the Union Bank, has also shown a sustained pickup in business growth. We continue to execute the strategic priorities that we have consistently highlighted in our previous various interactions. Sustainability, profitability, creation in an R-10, R-5 defined strategic pillars. Sustainability and customer centricity with ease of doing business for both customers and employees will be maintained. Some color. Next point is profitability. Yes, about profitability. So, interacting with various press people, investors, analysts. We come to know that, you know, there are various points which we can showcase. So, one was the core ROA. So, this time our presentation TLE shows what is the core return on assets. That is excluding the creditors. One of the good parameters to discuss upon is also the showcase. Last pillar is customer centricity with ease of doing business for customers and employee support. As far as the Union Bank is concerned, like profit, like ROA, how things can last quarter, which we have also showcased, probably I am very sure that the presentation and this presentation you all are having with you. So, at Union Bank of India, our commitment remains anchored in our guiding principle business first and compliance always. We aspire to remain a trusted partner for our customers, investors, regulators, and all stakeholders while contributing meaningfully to the Indian banking ecosystem. Equally important, our workforce of over 74,000 employees continues to embody our endearing philosophy. Actually, no, actually bank. Good people to bank with. Some of the transformational initiatives we undertook this year, such as Yuri and Sudarshan, were all developed in-house. So I think this is very, very important. It is the state of the art, unique in the industry, and at the minimum cost. And I think the shortest period of time, within six to seven months, this entire infrastructure and the unit is built. I will detail shortly. ...prestigious recognition. One is in the Rajvasha, Kirti Pruskar, our Union Bank has got the prize from the Honourable Home... ...third rank in the overall East 9.0 Q1 FY2627 performance ranking amongst all 12 public sector banks, reflecting our continued focus on customer centricity, operational excellence and digital performance. In a brief, 25537 crores, registering a growth of 30.31 YOY, OOP is 8,108 crores, reflecting a robust growth of 19% almost, 18.99 precisely. F consistently communicated to investors, and there was a question that if you grow and when you have to take deposits or maybe various questions, That whether the mean will sustain of 2.80 to 2.86 and remain above the full year FY2526 level of 2.70. With the initiation of rate hike cycle, certainly we believe it will be constructive to the banking industry and to us also, which we can deliberate further. Additionally, the OCNRB, let me acknowledge, compliment the Reserve Bank of India who came with this perspective is the five-year term. Return on assets is 1.38, which we have eased further up. Return on equity at 17.21. Capital position, we stand at 17.94. CT1 is 16.05. I think now almost most of the part of CRR is based upon CT1. And these levels provide significant growth headroom while maintaining strong resilience against any external shocks. Asset quality gross NPA declined by 87 bps, YUI to 2.42, net NPA improved to 0.42, down by 13 basis point YUI. PCR remained strong at 95.20. A credit cost contained a 21 basis point, reflecting discipline underwriting standards, effective recovery efforts, despite persistent geopolitical volatility. The improvement was supported by a sustained modulation in slippages. The slippage ratio improved to 0.72 compared with 0.91 in the corresponding period last year. Yes, the gross slippage during the quarter stood at 1909 crores, which were more than offset by reduction of 3086 crores by the recoveries and approvations. Coming to the deposits and liability franchise, our deposit grew by 6.88 YOY basis, and the CASA ratio is stable at 35, improving significantly from 32.56 a year ago, Demonstrating the success of our ecosystem banking initiating, which we have talked many a times during our interaction. On a year-round basis, our combined RTD and CASA, this is what we say is our first priority, is nearly grown by 1.11 lakh crore, resisting growth of 11.41%. The color of our deposit, you know, the share of various components. So, CASA and K-10 deposit increased to 80.3% from 77% in the September 25th. Let's talk about the average to terminal deposit ratio, which is 96% upon the average figures rather than much of the terminal figures. So our global advances continue to witness healthy momentum at 18.53 YUI, and domestic advances due by 17.36. And coming to the RAM, it is global level 55.45, where domestic is 57.43. And if we take the impact of shedding off 33,000 crore of IVPC with shed off, and also some of the low-yielding assets, I think the actual growth is more than 20-21% in that range. So, return advances grew by 11.24, MSME by 22.39, and this is the way in which we are going for a sustainable growth in various quarters to quarters. So, in private sector capex, we are seeing the next phase of close credit growth in economic activity, whether it is data centers or AI infrastructure, nuclear, renewable power, and select conventional sectors like steel, manufacturing. I think these are picking up, including pharmaceuticals. So this is giving a good sort of a comfort to we bankers that are going ahead as well. There is a good phase of credit growth in economic activity. So coming to the vision ahead for Union Bank of India, the journey ahead is not only about growth. It is equally about transforming the way we operate and serve our customers. As we navigate short-term uncertainties, our focus remains firmly on long-term sustainable growth and strategic transformation. We are pursuing this transformation through a balanced combination of intelligence, automation, and human oversight. Various initiatives are detailed in a comprehensive. So actually, to all my friends who have joined, my request is in our website and various gem portals and all, you will find an RFP, Project Muskan, known as Project Muskan, which encompasses, I think, nine pillars. I think very, very different from last 15-20 years, which you would have seen any bank coming with various RFPs. So, this RFPs are talking. The same sort of pillars are being talked in this RFP as well. It is unique, and it will create a lot much impact. But let me tell you, friends, we are already working on this, which we have showcased in our endless presentation, and two of the pillars which we thought initially are already completed, in which union solution is one. And other pillars which even show 90 percent, sorry, nine pillars, there is the work already done. So it is not that we are waiting for any consultant or any to come and start the program. So from moving from one pillar to nine, in many of them, we are somewhere from 20 to 40 percent of the work is already done. So, actually, we are very poised to complete that project, which is, I think, I would request all of you to please see Section 3 of page 30 to 35 in that RFP. So, the objective is straightforward to move from reactive management to proactive and intelligence-led automation with greater speed, consistency, and accuracy to 100. But by March 27, we expect to cross maybe near around, not this, but 28. We want to cross somewhere between 400 to 500 processes. I think that will give a lot of ease of doing this, a lot of accuracy, consistency, and customer service. I think that is the whole purpose of this. We also had a cross-functional team in the concept of garage, which is prioritizing various operational technology-related issue phase-by-field functionaries, and we are improving day-to-day processes. We also have established central reconciliation. Actually, it is also part of an RFP, but let me brief you that it is headed by a unit is headed by CGM at Hyderabad. Almost more than 200-300 people working over there, our in-house, and also some of the outsourced, but the entire reconciliation, because once Once we become robust, it will lead to business. That is what correlation we have seen in our bank and assurance function. It has a direct impact on the business growth. In that direction, I would therefore say that Union Bank of India is steadily building the necessary capabilities, strengthening our data architecture, enhancing workforce skills, and creating the right balance between technology, adoption, and human oversight. Customers, shareholders, investors, board members, my board has really helped us for their continued trust and support, and I would also like to thank you to all our investors. Whenever we have interaction, you have always gave us suggestions to improve upon those. So I think my gratitude to all of you for being with us and giving us a lot of suggestions for improvement. As our India, our Bharat enters into next phase of economics group, the banking sector is well positioned to support this transformation, and your bank, Union Bank of India, is determined to play a much meaningful role in this journey. We will continue to combine resilience with innovation, scale with efficiency, and technology with human judgment. So, thank you, and over to you, Sahajji, and over to the coordinator and all the investors for the interaction, please. Thank you, sir.

Shall we open the line for questions? Yes, please. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes on the line of CA Dr. Ashok Ajmera Chiam from ACHCON. Please come back.

Thanks for giving me the opportunity. Congratulations, Ashish, sir, and the entire team of the Union Bank of India for the fantastic set of numbers, sir. In fact, your presentation, beyond the numbers and the presentation, your verbal communication of more than 20 minutes now has really given the great highlights about the bank and what the bank is going to do, even in the future also, which is one of the best opening remarks so far in the four, five banks, whoever has declared their results. It's my compliment to you, sir, for the same. And you have, in fact, clarified most of the questions which were there in the minds of analysts like me. I have a few observations and some few data points and some information and some action plans on some of the items which I will just narrate. Sir, the credit growth has come back now in the bank in the last one year of your tenure. And, you know, before that, the four-five quarters, I mean, all those shortcomings, you know, removed, and the bank has again come back and brought its old glories. But going forward and even looking at these numbers also, the deposits are still a little bit lagging in spite of the opportunity of raising the deposits by way of this U.S. dollar dispensation by the RBI, FCNR, and other things. So, and that is making our CD ratio also very, very high, one of the highest, 88.13%. So, on that front, what do you think, like, this kind of CD ratio is okay, or it may go to even 90%, or whether you still feel that the deposit growth needs to be accelerated to match your credit growth? This is my first question, and I would welcome your answer, sir.

Sure. Thanks a lot, Ajmira Saab, for your queries. And we always take your queries, you know, as an improvement and to further how to make the bank more better. So coming to the deposits, as you said, in our case is lagging. So suddenly this last two, three quarters we are in the discussion. And let me tell you that earlier our deposit growth used to be either negative or it was below 3%, and now this time it is 6.8% and almost 7%. First, we are not averse to deposit, so I will give, you know, your reply into two, three pillars. One is our first priority is CASA and RTD, no doubt in that. So, we have actually garnered 1.11 lakh crore of in these two. So, this is our priority for sure, and we are maintaining 35% around. Even from June to now, 10,000 crore of CASA is there, which is a sluggish period, if you see, June and September. And from December and March, it is a period where, you know, the most of the funds are released as far as the various budgets are concerned. So, we have taken. Now, the question is that with resources, we are sitting at almost 18% of the CRAR and more than 16% of the CT1. So, we do have a very good leverage. The most important, I believe, the parameter to see the deposit and credit growth is the LCR and the NSFAR. LCR, if you see our presentation, is 120% average we have maintained in the entire court. It shows that we are 20% more than the prescribed regulatory guidelines. NSFAR is also on a much, much comfortable side. So, absolutely, we have not faced any issues on the liquidity. So, we have maintained very well. The next is, what other resources are available to the bank for raising the funds for deploying into the credit? Those are refinances from various refinances, the infrastructure bond, the ESPS. Certainly, we are not looking for the QIT assets. And the third is the green bond and the other things, tier 1 and tier 2 capital. These are also the funds which are subscribed but will not come into the deposit, which will remain into the system and which you can deploy for a better quality of the credit growth. Now, I think when we required, we increased from 2.5 to 6.8, 7% range. And absolutely that is not an issue. So when we increased from 2 to RBI, we garnered 2.25. So absolutely that is not an issue. And our total all-in cost, including everything, is around 7 and 43 bps, 40 bps, 40 plus bps is the margin with our foreign branches. So I think we are well within cost into that. And coming to the CD ratio, we always said that for, let us see that domestic CD ratio or loan-to-deposit ratio is something different and the global is something different. Global is always higher and domestic is always lower. So if you take the domestic, we are at around 84%. So we always believe that somewhere between 80 to 84, 85 is a quite comfortable range. Subject to, it is not very specific some range for every one-fifth size for all. It is for the various banks to banks and their capital structure and their other efficiency ratios. So we have all the liquidity ratios, 1% can see after listening to the analyst, which all of you, they subjected, they guided us that why don't you come with a core ROI? Because the treasury income has gone down like anything. Almost 50%, 46% precisely has gone down because of the market condition. You all know much better than me. So I believe that this is point to 1.03 and the RO that the Union Bank is not showing where you are having the very good. So I think it's required or maybe infrastructure bond or a green bond or a tier 1, tier 2 or anything, we will be going for it to fund that and we will be liquidity ratios as desired by any of the participants in the industry.

Point well taken, sir. You have very well explained it. My second question is on the total impact of the ECL provisioning and especially with the yield hardening and if there will be, I think, HTM mark-to-market also will have to be provided for. So what is the revised number of the ECL and the impact of the ECL overall in the how many basis points it can be over a period of time? Coupled with that, the benefits of the rate hike or recent rate hike by the RBI, how many basis that can offset the overall ECL impact, like maybe the profitability may increase by 7-8 BIPs point because of the rate hike, which is going to be factored in, and already whatever the report linked credit, I mean, loans are there, the rates must have already gone up, whereas the deposit rates are not going to go up matching soon. So, overall, what will be the impact, and how are we prepared for the ECL provisioning, sir?

Yeah, Ajmerajee, earlier also, we had shared the ECL impact on us, and somewhere in the range of 5,500 crore, we had said, will be the impact of ECL on Union Bank of India. But I'd also like to add here that since the quarter of March, we have still now added around 1,000 crore of additional buffer in provisions. 700 we did in March, 100 crores in the quarter of June, and this quarter also, 200 crores we have kept as an additional provision, which as of now appears to be that we'll be able to use for the ECL provision. So that is, we have already provided for right now. 5,500 crores, if you look at from the impact on the ROA, we have around, I think, 8 lakh crores of perspective, I think 70 basis point is the impact on CET if we absorb separately. But you are also looking at our profitability numbers per quarter. So one quarter profit itself is quite sufficient to bear this ECL provision. The second part that you asked about the impact of the bond yield, I think these are very moving parts, you know. First is that as on date, the balance sheet, what is the impact on ECL, which I have shared. But remaining things are moving, but, you know, something will be positive, something will be negative. For example, as you said, that the bond deal, obviously, it impacts the valuation of the bond. But at the same time, when the interest rates are rising, and you are very much aware that it will first give us, you know, advantage in terms of increase in the net interest margin. So I think these moving parts, they offset each other generally. We should be, at this point of time, should be taking 5.500 crores as the possible impact of ACL, of which bank has already created a buffer of around 1.0 crore.

Yeah, just to supplement, we talked about, in my address, we talked about five pillars. Actually, what our Niteshwar is saying is absolutely true. In today's dynamic world, disruptive world, all these things will be happening somewhere or the other in bits and bits and pieces. So certainly, if you have to be robust enough to absorb these shocks and keep moving your business and profitability with robustness and sustainability, so in a sustainable way, probably I think we need to work upon those five pillars which we are working. That is what actually he also meant to say, that these are the things which will keep on happening. Sometimes it will come down, it will move up. But the thing is that, now if you see our presentation today, the treasury income has gone down by almost 45-46%. But our copy income has increased by 22.90%, that is almost 23%. So we are actually concentrating on very, very core business of the bank, and to build the robustness...

The views on this drought impacts are now the conditions are deteriorating on the rain monsoon front, and the droughts are being declared in every state, drought conditions. So how do you see, have you taken that into consideration, started working on it, that how may it impact our business either from the normal recovery front or from the additional credit expansion front? So how the drought conditions are going to affect, and how are we going to tackle this situation, sir?

Yes, sir. We are not seeing any adverse impact on that year. Let's see what happens in the next quarter. But yes, the government is also very proactive, and they are taking the measures for protecting that year. So whatever the government initiative will be taken, we will be participating in that. And previously also, whatever the debt waiver or whatever the government initiative has been taken, we have actively participated in that, yes, sir. So as such, we do not see any adverse impact on ours.

Okay, sir. Thank you very much for answering all my questions and giving such an elaborate presentation, sir. All the best to you all. And yes, I will come back again if the time permits. Okay, thank you very much, sir.

Thank you. Thank you.

Thank you. Next question comes from the line of Maruk Adjaniya, Ittara Capital. Please go ahead.

Hello, sir. Congratulations. I had a couple of questions. Firstly, on savings deposits, the growth has been very good. Are there any institutional deposits here, or they are all retail? Are there any bulk or institutional deposits?

Yes, it is mixed, but we are actually much, you know, targeting on the premium saving account and the salary accounts. So we have seen almost 1.8x sort of an increase in these two, three parameters. And institutional, I would say that there are some government accounts which are to be opened on a large scale in the saving bank only. It is as per the mandate of the various states and central governments. So, comprise that as well. So, that includes both on the retail part in saving as well as something. In institutional, we do not have the bigger chunk, say, some 5,000, 10,000 crores in savings of some distributes, like that. We do not have. So it is basically, for your body, I believe if it is institutional, it must be in a lower range of...

Got it. But any quantification, how much is institutional?

As of now, like, we're not keeping that data, so if you want it, we can interact offline, but overall saving bank deposit growth was 12%, and overall carter growth was 14.7%, so I think we can give separately. See, I would tell you that there are certain panchayat accounts and all that rural development, you know, ground level block accounts and all those are there, which we are seeing as an institutional.

Got it, got it. That's so helpful, sir. So, just one more question. I know it was asked earlier, but because bond yields are sticky, what will be the one-time impact of valuation of HTM when you transit to ECL, right? Because that impact one time is irreversible. That's why we want to know the quantum. I know for that bond yields have to stay high. If they come off, then there's no impact, but just asking.

Yeah, see, we have worked out, you know, something first is that, you know, on the stage one, stage two, stage three, that around 5,500 crore odd amount is going to come. Now, there are two other parts. One is on the staff and other is on the HTM. But, see, there are certain clarifications and other things are there, which are in under discussion at various. Some workshops are also happening. So, we have also kept some advisor or consultant on this OPSA and ECL and all those things. So, we are working upon and all the banks are in discussion with that. But one thing which I would, Madam Maruk, I would like to give a comfort to you, that what sort of things will come now bank is in a position right now to, I would not say they, you know, absorb it or something. But let us understand that the way in which the banks, the industry itself, is generating the profit and the sound business in terms of GNPA, NNPA, ROA, and all those things, particularly if I take your union bank, then all the things are on a very positive front, positive side. I think we are in a position to absorb those things without any much hiccups, that is much comfort level, but specifically, if you are asking, we have worked out, we have worked out on various permutation combinations as far as the various interpretation and understanding, but it is not prudent right now to come up with those figures because it's still under discussion, and there are some workshops happening, And also, all the banks and IVV all are discussing. But at the same time, as an investor, I certainly feel that you should have a comfort level on your bank that whatsoever, even the other side of the scenario also, we are in a position to absorb it very swiftly going forward.

All right, sir. And my final question is that, would you have any comments to offer on potential M&A in PSU banks?

No, that is the same I am hearing like you are hearing. I also don't know much. Sometimes I also ask investors, what exactly are you hearing? So, I don't have anything. But, when we talk, you know, in my address, you would have heard the five pillars. So the thing is that our total focus is that quarter to quarter, how to take the bank into the next level of robustness. Robustness in terms of all the five pillars. Now I am not restricting the robustness only on the compliance and assurance and other things, but if you build really on those five pillars, this year, next year, next to next year, five years, we do not know, you know, the disruptive, the world which we are living in, what is going to happen when. But at the same time, we know one thing, that how to make the bank more, better and robust, so that any eventuality, any disruption, any shocks, any adverse shocks, we live in a position to.

So perfect, sir. Thank you so much. Thanks.

Mayrook, in the meantime, about the breakup of the saving portfolio, overall the growth of YOI was 40,278, out of which 75% detailed saving growth, 30,027, and only 25% was institutional saving growth, 10,249.

So the growth is very sticky because the majority comes from the detailed portfolio.

Thank you. Thanks so much.

Thank you. Next question comes from the line of Jai Prakash Mudra with ICSA Securities. Please go.

Yeah, hi, good afternoon, and thanks for the opportunity, sir. There are a few questions. First is, sir, on core ROA, right, so you have given core ROA for the first time. I believe, have you, you have removed treasury and TWA recovery, but it looks like the interest on IT refund you have also deducted. Is that the understanding correct, or, or, or, I mean, apart from Treasury and T.W.O., is there anything else also which is not there?

One day, only T.W.O., recovery, and Treasury. These two things we have removed.

And, sir, now on write-off amount, actually, sir, if I see our last two, three years slippages have reduced materially, Basically, the write-off amount we have done at around 3,800 crore in first half. I just wanted to check, sir, how much of would this be, let us say, management-driven, and how much is because of the timing or regulatory timeline. I mean, how much is credential and how much is timeline-driven? And the reason why I'm asking is, if let us say, if you're focusing on core ROA, then bank can actually reduce the write-off amount, because the recovery from write-off anyway is not getting accounted in core ROA. And if you reduce write-off, then actually you can save on credit costs. So that is what I was trying to understand of this first half write-off, how much is prudential and how much is, you know, time-driven.

Yeah, see, you can answer the, because see, why let us understand, Munraji, that how, you know, various parameters mean to us and mean to others. Here when we are saying core ROI, now actually we are trying to, you know, when you start building the efficiencies, you want to, want to be more robust, resilient, and so you create and try to benchmark again your own standards. So when core ROA we have taken, it is not, you know, like, you know, to write off or not to write off and all those things. It is very, very clearly that we are continuing with the same run rate which we are continuing the last half year, not this one. The last we had one bigger account. That is why the amount was more. But if you see the last two quarters, we are continuing with the same run rate. And we have told very clearly that our target is around 3,000 crores as far as, you know, the TW write-off is concerned. Recovery in the TW is concerned for the full year. And the total recovery, we want to be more than shortages. So certainly in that range of 10,000 to 12,000 crores, certainly we are aiming, and this return-off also we are aiming in the same range. The treasury income, which has, you know, inflicted a lot and probably will continue. So that is the reason that the ROA is 1.38, which is increased. Even there is a decrease of 46% in treasury income and the one or two account, which we got resolved through NCLT route in the last half year of 25-26. But at the same time, all the three ROA now, we are monitoring the score. So I think that is not an issue that where we have to write off or not to write off. The things of cleaning the balance sheet, once you are good for operating profit, NII, whether it is ROE, ROA, and all the other things. Then, after that only, so not impacting anywhere, we have taken out 200 crores this quarter and added to additional provision, so it is now 1,000 crores standing strong in our balance sheet. If I take that, the GNPA comes around 0.31 levels, and the PCR goes to more than 96%. So, I think there, where we are coming from, and that is what we are depicting, and we are discussing it here, that our purpose of benchmarking ourselves is a bit different, and trying to improve from there. Over to you, Munraji.

Right, sir. Sir, okay. So, let me ask you, sir, this credit cost we have given is 21 basis point, which is a reasonably stable number and a benign number. But going ahead under ECL, you will have a little bit bump up in standard effects provisioning. Would you believe that, I mean, could that jeopardize the core ROA of 1% level? How do you see, A, the rise in standard assets provisioning because under ECL, and could that have a bearing on 1% core ROA that we have shown?

Yeah, see, ECL, which we talked about, is around 5,500 crores, which we are now discussing and talking about. Last one or two quarters, and we told we are comfortable in that 5,500 crores. Now, other two things I see, let us see, other two parameters. One is the lowest of the SMA figures in Union Bank history after Raman Commission. It is, I think, 28,200. So I think that is where it is the lowest. The credit cost, the tuition cost, both are lowest. And let us see one more thing, that there is a good credit growth. Now your credit growth you are seeing in the terminal figures, because now most of the churning we have done, and we are doing, still we are doing, but then most of it we have done. The IGPC 33, 36,000 taken out, then some almost 50, 60,000, 70,000 crore, low-yielding assets we have taken it out and all those things. The credit growth is quite good, more than 20, 21%. But at the same time, if you see the figures on the retail side, our 700 and above CIC score has moved up from last. So I think I am only saying last one quarter. But you can see last four quarters has moved quite up. Now coming to 25% and above, external rating. So almost 94-95%, I think that is also improved last quarter. So, these two figures show that we are underwriting quality assets, number one. Number two, the monitoring is really very good using technology, analytics, and feet on the street, and building the culture where, you know, we create a good quality assets, and at the same time, profitable assets. That is the reason that, again, it is improved. Core RO has improved from, I think, 41 or 42 basis point from last quarter, and now we have started, you know, monitoring it. Now coming to the impact of ECL, even if it comes, we will be in a position to take care of it. That is where, and still, we have two more quarters left. So, I think we are in the right direction, we are in the right track, and we will be in a position to certainly handle all those situations.

Sorry, sir. Actually, my question was not very clear. Sir, this 5,000 crore is actually no problem at all when you transition. My question is, sir, on a recurring basis, right now credit cost is 21 basis point. And under ECL, because now the stage 2 assets will need more provisioning than under IRAC, so standard assets provisioning will go up. Do you suspect that core ROI can, yeah?

You are ongoing versus incremental, correct? Yes, sir. Yeah, so actually that is all that are in discussion and in working. So as we move close to the march, I think we will be knowing all those figures. But by chance, that is the first itself on the transition date, say 5,500 odd, odd I am using can be plus minus something here and there. So even that, we are in a position to take it forward safely. So, I think ongoing also will not be much issue, because even ongoing will depend upon, on the, so that is why I was trying to tell you, that even ongoing, incremental as well in the position, but the actual figures, I believe he was asking me. Look, I think I'm not very sure. I think Ajmera saw when he asked. So there are various discussions happening and once clarity comes, so then I think figures will be in front of you. But at the same time, I think we are in a position to move safely where the one time as well as we believe that with these figures, ongoing will not have much of the impact.

Right, understood, sir. So, that is clear. We will await as in when we get more clarity. And, sir, secondly, on growth, right? So, now we are doing reasonably well. We have stepped up on growth. What is your sense, sir? Where would we be ending the year? Would it be similar? Last time, I think you said we will be slightly above system. Does that still continue or, you know, what is your outlook on growth with respect to industry? Industry is also now 18-19. We are also 18-19. What is your sense? Where should we end the year?

As per system credit growth, we will be moving as per that only.

And sir, anything on the bulk side, we have seen slight increase in the bulk deposit. Now this is, the entire book has been reset, right? So you do not have any material issue in growing the bulk deposit because previous to this quarter we were actually shedding a little bit of bulk. Now should bulk deposit be business as usual? Is that the understanding or, you know, there was some opportunity wherein you increased bulk and going ahead bulk may still be lower? What is your thought process?

See, the bulk, as per definition, is known above 3 crores, correct? Above 3 crores. So, that we generally term it as a big description of a sector project, and within which you do an LC, say, 60%, 70% of the total term loan. There also, LC, 10%, 15% margin is there, various bank guarantees are there, it is in there. So generally, let me tell you, bulk doesn't mean that you are going for a high cost or maybe a differential rate and all those things. It means about 3 crores. So we are going to accrue and certainly when we say the credit growth will be in line with the industry, we will fund it first through retail and term deposit, CASA and retail term deposit, then various other channels and certainly bulk deposit. Now comes the bulk means, let's say, above 50 crore, 100 crore, 200 crore. So we are also taking that. But at the same time, earlier we used to take even 2,000, 4,000, 5,000 crore from single party, but that we have reduced. So now we have bifurcated. So sometimes we take 300, 400, 400, 500, various maturities, various areas. And certainly, I am going back to my earlier commentary, where the financial institution we were trying to avoid. So, still we are continuing with that. That financial institution, we don't prefer much, but non-financial institution, we take it. So, from 2.5, we have moved to 6.8, 7% growth. So, we will be moving in that line only, as far as the deposit is concerned.

Right. Thank you, sir. I have a few more questions. I will come back in the queue. Thank you.

Thank you. Next question comes from the line of Sushil Choksi with Indus Equity Advisors. Please go ahead.

Congratulations to Team Union Bank of India for excellent performance. Greetings for the first of the season. My question is, India Prime Minister's College, Vixit Bharat 2047. Union Bank and Indian banking system needs to transform for the new initiatives, new businesses which are emerging in the globe. And India also needs to catch up. The trade businesses for the new initiatives led by hydrogen, maybe AI, GPUs, data center, and many such EV mobility, value chain, solar value chain. I'm not talking about module, but value chain, such businesses. And some of these businesses are commenced by PE or new entrepreneurs who have technology, and they are backed by PE. Our financing which is coming from certain individual investors were given the initial capital. Such transformation of businesses are emerging well. How are we placed to garner business in such segment? And what initiatives will we take to understand this business to grow well along with them?

Yeah, I think very pertinent question, Sushilji. And certainly when we have to meet all of us, the Vixit Bharat dream of 2047, we need to be in that league. And moving into that league needs understanding of the new lines, new initiatives, new businesses. So certainly, as of now, Union Bank is quite good here in terms of renewable energy, solar, BESS, that is battery storage systems and all, and the data centers and other things we are already on. We have even underwritten some good sort of papers, and we have even downsold. So, almost I can give a color to you that almost, I think, last 9 to 10 months or 11 months, we have underwritten almost 90, 95,000, 1 lakh crore of good papers, and we have downsold. So, that is the way in which we are moving. Now coming to some more new streams, which are coming in, like hydrogen, like the nuclear. So these are the new things which are coming in, and we are also, you know, doing employee skill development plans. So certainly we are trying to engage with the various rating agencies, Because they are somewhere better in, you know, understanding the risk, understanding the models, understanding the projections, and understanding the various other factors to underwrite. And we are also working upon, you know, this automation. It will take some time, obviously, that how we can have external data. So still we are using, but mostly it is not very automated, but then we are going through AI and other things. Where we can use all these data points across the world to do the proper assessment of the proposals. So, most of the things which you said, we are into those lines of underwriting, which other banks are also doing, but then our bank is also doing it nicely. But coming to the hydrogen, nuclear, and a few other more things, we are analyzing, actually we are in discussion with some of the partners, even in this line of business. We are also in discussion with some of the rating agencies of the world class that how they see these businesses, how they rate these businesses, Because they also rate, having the same parameters, and we also do the appraisal assessment on the same basis. So, jointly, we are trying to have some idea and some models with them. So, I believe your question, and I would not only say we talk about the corporate, but let me tell you the businesses, particularly the commercial banks, We may be, probably we will see the automated system of the cash flow system of, you know, the credit dispensation and the monitoring and otherwise, you know, having the growth particularly to meet the 2030, 2035 and 2047 objectives would not be that much easy. So that is why, again, that Sudarshan which we told you, and not only to you, but I would invite all the investors who are listening to this con-call, that in Bombay you are invited to see this Union Sudarshan stream. And now we are also working upon many things, and one RFP is already there, which you can see. But we are working upon some more things, I would not diverge right now. But as we move forward by next one or two months, three months, you will be seeing some initiative where we are working to build the capabilities in, you know, the credit administration, I will use the word, rather than credit sanction, credit appraisal, and credit disbursement and credit monitoring. So I would use a better word as a credit administration, how we can better entire ecosystems so that the disbursement happens fast, credit growth happens fast to mid-2047, but at the same time, quality is maintained, which is most important for any of the regulatory entity.

Sir, basically, you are indicating that long-term financing for nuclear, power, infrastructure, data center, construction may not take much time for data center, but these rental discounting, 15, 19-year kind of project financing, you are open to. Am I to understand?

Yes, we have already done. We have already done.

Okay. Sir, now my next question is, you know, India is growing. A lot of Indian corporates are growing globally, and domestic also M&A will start. In one of our peer larger banks call, they said they are aligning with some foreign banks on financing for M&A. What is our vision on M&A financing, sir?

Yeah, see, we have done a few deals on M&A, and we are already in talk with some of them, and also our, you know, this requires actually creating a desk within the large corporate vertical and risk management with a proper skill set to underwrite or maybe to assess the proposals which are coming under the hydrogen or the nuclear or maybe on the merchant acquisition, which we are already in. And that is where I said that we need one or two months more, along with, you know, some RFPs to build in technological as well as human capabilities to underwrite and create this. So we are working upon that, and I believe that the things will move in the right direction, and already most of the things which you have talked, actually if you have talked about data centers, I think we have already underwritten some six, seven good proposals, good quality papers, A-A-A-A sort of papers in the data center. So we have that capabilities. So we have to further skill it, you know, to hydrogen and other sort of energy or maybe, you know, the other business lines which are going to come. And coming to, you know, this, that is why I said this FCNRB will help three years, five years for the asset and liability. And let me tell all the investors and Soshinji to you as well that we have, you know, issued this bond, foreign currency bond of 600 million. And now we are listed in the stock exchange, Gift City, NSE, Gift NSE Stock Exchange, and it is a trade-in. So certainly now we have already opened a way to take the money for a longer term through that route. So that is actually not an issue when we talk about this foreign currency bond. So, it is like, you know, an MTN program, which we can always enhance and, you know, go forward as an alarming, some more batches of 200, 300 millions. Also, we would not like to right now much discuss, but already we are in talk with some of the very good worldwide agencies for some, you know, the funding lines in a very good perspective on the green energy side. So, but then not the right time right now to discuss more upon that, but we are in discussion, and certainly when we move towards this sort of an appraisal systems, We will be needing that, and we will be utilizing those opportunities to capitalize on that.

My last question in this round, based on whatever I could sense from your conversation, we have a good credit pipeline where large-ticket corporate book is concerned. Can you indicate what kind of growth will you do in RAM?

She will tell on the pipeline.

In the pipeline, sir, for the large corporate, which is basically into the infrastructure and area, and likely to be dispersed in the next one and a half years. We don't have any problem in building further pipelines and all this. The credit proposals in hand also. These are what I am saying, these are the sanctions.

So, Sushilji, just to add on to what Amrish has said, so we are across the field. So, as Saru is also mentioning, we are trying to go into different fields, including the EV mobility. You have spoken about EV mobility and other areas. And today also, what we see that we have got around a good amount of proposal, which is under pipeline, which is around 64,000 cores. So, one like 20,000, 25,000 cores of sanctions that we are holding for this gospel. And around the 64-68 course of sanctions, you know, in proposals in pipeline, which are going to be sanctioned maybe within a month's time. So, you know, in a pipeline, we are comfortable with the sanctions that we are getting across the sector we are getting. So we don't find much challenge in getting the, you know, good amount. And as Sarabha was also mentioning about the underwriting, so we have done many underwritings, and after doing the underwriting, the capability, you know, that capability is there with us, so even the other banks are also, you know, taking exposure from us, so we have downsold many of the proposals after getting this action. So right now, that is it.

Thank you for answering all my questions, and good luck for the year to the team in Eugene Bank of India.

Thank you. Thank you, Shishuji.

Thank you. A reminder to all the participants, please restrict yourself to one question. The next question comes from the line of Arjun Kumar with one-on-one. Please go ahead. Mr. Kumar, please go ahead.

I want to know in the other income, why there is a fall in 10% Y-on-Y and 5% Q-on-Q?

See, there was a reduction on account of reduction in treasury and technically written of recovery. 545 crore on these counts were on a YOY basis and on a sequential basis. The other income, non-interest income got reduced because of booking of PSLC commission in Q1 of 217 crore, which was not there in Q2.

Thank you. Mr. Kumar, please return the queue for more questions. Next question comes from the line of Param Subramanian with Investec.

Yeah, hello, sir. Thanks for the opportunity and congrats on a great quarter. Sir, just wanted to understand on Pertland PSNC fees, why is there no PSNC fee in this quarter? Because we understand, I think, some of the large private banks are still putting big shortfalls in PSN, so the opportunity is there. That's my first question, sir, if I can come back to the question.

See, PSLC income we book depending upon our priority sector portfolio, and we keep on working on it, assessing the portfolio going forward, and wherever the room is available, we sell our portfolio and book the income like we did it in Q1, and if the situation permits, we will be doing it in this quarter or the quarter going forward.

Yeah, we had an excess also this time, but we wanted to be more comfortable on the excess side of the PSL and then move forward. And earlier quarter also, we have already, you know, if you see the SMF, that is small and marginal farmers and agriculture, both portfolio we have sold earlier. So, absolutely, that is not an issue. So, we are already, this time also, even now also, that is, the issue is not there. But then we wanted to assess properly and then move ahead.

Thank you. Mr. Subramanian, please reach out to the queue for more questions. Next question comes from the line of Amant Singh, Sahaj Singh Ramiya, ICICI Securities. Please go ahead.

Hi, sir. Thank you for the opportunity. I wanted to understand in the CWO recovery part, is there any one-off lumpy recovery from Maharashtra State Government or PSU or something like that? Or is it all small as a recovery zone?

No major, no lumpy recovery. Equal, equal. Recovery, Maharashtra state government debt driver is not the part of that recovery. These are all small, small accounts, and one VBOAL, 150 crores we received in this. So no major bigger check. All small only we are doing.

Maharashtra government accounts were not written off.

That is what Mr. J. wanted to know.

Thank you. Mr. Sahaj Singhani, please reach and thank you for more questions. Next question comes from the line of Ashlej Sonjay with Codec Securities. Please go ahead.

Hi, sir. Good afternoon. Sir, first question is, what is the crop on exposure that you have in the states of Maharashtra and Karnataka? And second question, sir, the growth in gold loans seems to have slowed quite a bit now. It's growing at only about 7% YY. So, any reason for that? And along with that, if you can share the breakup of gold loans between retail and agri.

So, I think this, what was the question of Maharashtra and Karnataka? I think we need to work it out and give, but not much because, you know, because the Andhra Bank was actually merged with us, and we had a very good portfolio in AP and Telangana. And it is more of an SSG. Almost, I think, our SSG portfolio itself is more than 35,000 Kronos, approximately. So, that is why, you know, various questions when asked about drought and all those things. So, we have not faced any of the issue on those lines as far as the agriculture is concerned. Okay, now, coming to the gold, actually, yes, very, very objectively and purposefully, we have not, you know, grown aggressively in the gold. The purpose is not any negative because our LTV, purposefully, the LTV we have kept not so good, conducive to the market and the rate of interest also. And we wanted actually to digitize the entire journey, including the SSS role and, you know, the audit role and how everything can be digitized, how inspections can take place, and the gold pouch and everything. So that's the reason that we try to build. We are actually building it very properly. It may take one or two months more before, you know, embarking upon the next phase of a growth. Because if you see the union bank per se, earlier years we have grown very fast. So always there is a better to have some consolidation phase and to move to the next with all those sort of a robustness. And until you build technology, both in assessment and monitoring, probably I feel that it will not be prudent to scale up the business in a very nice manner. So, that's the reason that we have not grown much, but yes, we are in the business, and if you are talking about retail and agree, probably, I think we can take safer side, 55 and, 34

and 55, yeah, 55 and agree.

Thank you. Mr. Sonjay, please reach your hand to you for more questions. Next question comes from the line of Rohan M with Equalist Securities. Please go ahead.

Good afternoon, sir, and thanks for the opportunity, Congress, and good set of numbers. So, just wanted some clarity on the one-offs in OPEX, if there is something there. And also, in 1Q on ECL, you have mentioned that the total ECL impact will be 11,300 crores, of which 5,500 was provided. So, in this quarter, we are talking about 4,500 of residual provision. The total 1,000 crores that has been quoted from 4Q, 1Q, and 2Q, that is what you are adding in 5,500, or is there a change in that total number of 1,000 crores? I just wanted to clarify that.

No, so actually what you are asking is not very clear, but second part I think I can understand and clarify again, that as per our estimate, the ECL impact will be 5,500 crores when we transition. And to take care of that impact, since the March quarter, including the current quarter, we have created a additional provision buffer of 1,000 crores to take care of the requirement of 5,500 crores transition amount. The first part what you asked is not very clear, if you can repeat. Great.

On the second part also, I was asking that in OneQ, you had said that total ECL impact will be 11,300 crores, of which you had already provided 5,500 crores.

No, no, no, no. That is not, see, again, whatever we have been saying since March is the same thing, that around 5,500 crores of transition impact, and to take care of that, since March quarter, we have been creating additional buffer.

Okay, I think now I understood probably there is some miscommunication. So first we build 600 crore additional, then 1,700, then 100, then 200 this quarter. So, total 1,000 crore, and it is not part of your profit, it is not part of your PCR, not part of your any CRAR. So, we have kept this 1,000 crore while maintaining the best of the profits and the other issues for the union bank. So, I think that is some miscommunication. Our transition will be for 5,500 crore, and as Mr. Mudra was asking, ongoing, still that all work has to be done. It is under discussion. Some interpretational issues are there. That is the reason that even the advisors and the consultants are put by all the banks into ECL, and the industry body, we all are in discussion. That will take time. But as far as your question is concerned, so it is 5,500 crore, our approximate working, plus-minus maybe 100-200 crore here and there. But 1,000 crore we have kept aside since last three, four quarters to meet out this ECL only going forward.

Thank you. Mr. Rohan, please reject the clue for more questions. Next question comes on the line of Vanch Solanki with RSP Inventures. Please go ahead.

So, my question is that you told that you have, you know, had $2.25 billion of FTNR deposit. So, how much of our FTNR advances we have given against this deposit? What's the number? Leverage. 70. Leverage. Leverage. Yeah. Yeah.

How much? 70% is... Approximately 70% is through leveraging.

And also, one last suggestion from my side that you was, you know, hearing the bifurcation of other income in the possession fees and commission and all. But from last two quarters, maybe you have stopped the bifurcation of other income. So, please, if you can restart the same. That's from my side.

Thank you. Mr. Solanki, please reach out to the queue for more questions. Next question comes on the line of Nitin S. Dharmavat with Aurum Edge. Please go ahead.

Yeah, thank you for the opportunity and congratulations for a good set of numbers. Also, thank you for patiently answering for almost one and a half years now. My question is about the guidance. Considering the fact that there is an interest tightening cycle which has started now, so will there be any impact on our ROA and NIMS going forward, and what do you see where the trajectory is heading towards the end of the financial year?

See, you know, with the increasing rates, it is constructive, as you have seen. So let me come back to the December when the repo was cut by 25 basis points, and March we suffered by almost 16, 17, which came down to 2.64. And after that, there was no change in the repo. But from there, we built 22 basis points up till now, and we are sitting at 2.86. So without any rate stance change, now only it has changed, and the impact has to come in the coming quarters. We could manage improving the names and ROA without any stance change for last, I think, nine months, from 1st of January till 30th of September. So, we always believe to, you know, work hard and then come back with some good set of improvements in the efficiency. That is what we touch in my address also on the five pillars. Now, since the rate hike is there, we are confident that it will have a positive constructive in the name and our way going forward. But at the same time, because our repo link is almost 53-55%, so it has to be conveyed and it is conveyed. But at the same time, you know, to make the asset quality, to keep the asset quality right, and have the competitiveness in the market at the right product level and the product range level. Two things are different. Product is different, product range is different. And which is scored. So we have kept improving our rating, about 25 crore external rating, which you have seen, above 94-95%. And CIC score, which we have further improved by 1% this time. So, I think we keep on saying since January that we would like to defend and keep on improving from here onwards. So, we still...

Thank you. Mr. Dharmavad, please return the queue for more questions. Thank you. That was the last question for today. We have reached the end of question and answer session. I now hand the conference over to the management for closing comments.

Thanks a lot. What's happening sort of a quarter for the entire banking industry, entire economy as such, as far as our country, our Bharat, our Indian economy is concerned, conflicts, West Asia conflict, and the oil prices coming down, moving up, then again, perspective by both the government and the Bank of India. I think in the economy, we could sail through, and the entire banking industry, we could sail through. And as a union, we adhere to what we give solutions to us, and we try to work upon that to improve the next time, exchange. So it is one of its kind. It is already in our website, 2235, in Project Muskan. I think that also gives some color, and there is something in pipeline the next quarter on the new initiatives, But still, we are waiting for, you know, some more conjectures to happen from the various economic participants. And we will be in a position to share with you in between as well whenever the things happen or maybe next quarter when we meet you. Till then, we are thankful to you. We are grateful to you. And we are obliged. Jai in Jai Bharat. Thank you.

Thank you. On behalf of Union Bank of India, that concludes this conference. Thank you for joining us. You may now discuss your name.