The City Union Bank (CUB) is likely to appoint Boston Consulting Group (BCG) for upgrading its digital-lending processes, said MD & CEO N. Kamakodi during an earnings call.
The move assumes significance as most of CUB’s peers had grown 14%-16% in the digital- lending space over the last 3-4 years, he added.
“Historically, we did not concentrate much on segments such as housing loans, credit cards, vehicle loans, personal loans, LAP as well as co-lending model.,” he said.
“Now, we could see that our peers are growing in these segments. Based on our learnings in the last 3-4 years, we are on the verge of finalising BCG, as our consultant to upgrade our existing digital-lending processes,” he added.
Accordingly, the private sector lender has shifted its attention towards retail products such as housing loans, vehicle loans, personal loans and loan against properties (LAP) as well as co-lending. For FY23, MSMEs accounted for 43% of the advances while gold loan stood at 25%.
“The approval proportion should progressively increase in the next few quarters. We are aiming at 12%-15% growth for the current year, which should be skewed towards year end. No major change is expected in composition of advances,” he said.
Asserting that the changeover might not happen during the current fiscal, he said: “So, I am not taking those things for my growth projections in the current year.”
According to him, FY23 had been a decent year of progress for CUB, despite the challenges. Most of the parameters such as net profit growth, reduction in non-performing asset and Return on Asset growth had been broadly in line on an annual basis while the growth was below the expectation levels.
The bank had estimated the slippage for FY23 to be in the range of 2.5%-3% of closing advances, but it ended at 3.02%. The bank expects substantial improvement in recovery in FY24 to get net NPA back to pre-Covid level in the coming 4-5 quarters, he said.
