Union Bank Eyes Loan Growth Amid Capex Challenges

Union Bank of India faces challenges with sluggish corporate capex demand and aggressive market pricing, reducing targeted credit growth. MD and CEO A Manimekhalai highlights a pipeline of Rs 39,000 crore loans awaiting sanction and a focus on retail, agriculture, and MSME advances amid muted corporate growth.

Union Bank of India is grappling with sluggish corporate capex demand and a competitive pricing environment, leading to lower-than-expected credit growth in the September quarter, according to CEO A Manimekhalai. The state-owned lender faced limitations in lending proposals, leading to a decline in corporate loan growth to 6.3 percent.

Despite these challenges, Union Bank is targeting a loan growth of 11-13 percent for the fiscal year. Manimekhalai mentioned a lack of anticipated private capex contributions, resulting in muted corporate advances overall. The bank has focused more on retail, agriculture, and MSME loans, with a pipeline of Rs 39,000 crore awaiting sanction.

Manimekhalai emphasized the importance of maintaining profitability and noted the bank's net profit jump of 34 percent in the September quarter. The bank is also considering raising capital in the next quarter, dependent on market conditions, while current financial buffers are deemed sufficient for continued growth.