Gap between slippage and recovery has narrowed: City Union Bank CEO

Kumbakonam-based private sector lender, City Union Bank, has said slippages to the non-performing asset category have slowed down during the past two quarters, and are now tracking the pre-covid numbers. The lender added that the gap between slippage and recovery has also become thinner.

Speaking to Business Standard N Kamakodi, MD & CEO, City Union Bank, said recent media reports of high-risk loans were past issues and have been addressed. Media reports cited the Reserve Bank of India’s annual inspection report which was obtained through the Right to Information Act.

“These reports are for FY2017, FY2018 and FY2019. Some concerns were raised and subsequently we gave our explanation and those points were dropped. If our explanations were not satisfactory it would have been marked as NPA. The points were raised and subsequently explained,” Kamakodi said.

“In fact, we had the least divergence in these years lower than the RBI tolerance limit. There is absolutely nothing material which is affecting the bank’s P&L,” he said.

The old generation private sector lender, which has a loan book close to Rs 41,000 crore and deposits of 49,000, reported gross NPA of 4.65 per cent of advances at the end of the April-June quarter, down from 5.59 per cent a year ago. Net NPA ratio was at 2.89 per cent as compared to 3.49 per cent.

Kamakodi said in the last couple of quarters the gross and net NPA ratio has come down and the bank expects asset quality to improve further.

“The years before the Covid period our slippage rate was 2-2.5 per cent of the advances. During the Covid years, that is 2020-21 and 2021-22, the slippage ratio increased to 3-3.5 per cent. In the last couple of quarters the slippage ratio has come back to pre-Covid level,” he said.

With improving recoveries, the gap between slippages and recovery has narrowed, he said.

“We are seeing slippage ratio coming down, and NPA recovery improving. The gap between slippage and recovery has become very thin. The difference was only Rs 20 crore in the last quarter,” he added.

The bank’s share closed at Rs 179.05 a piece on BSE, down 4.7 per cent from its previous close while the broader Sensex was down 1.46 per cent.