City Union Bank eyes non-gold loans to spur growth

In Q4, nearly two-thirds of activity came from non-gold lending (₹1,935 crore)

In Q4, nearly two-thirds of activity came from non-gold lending (₹1,935 crore)

City Union Bank (CUB) Ltd. is considering non-gold lending to drive future growth, though it plans to roll out its own credit card in the coming weeks.

The private sector lender - which is looking beyond gold lending and the Emergency Credit Limit Guarantee System (ECLGS) for businesses - said it hoped to post low double-digit growth to average for fiscal year 23, compared to 11% in the last fiscal year.

"Going forward, the proportion of non-gold loans in overall credit growth in FY23 will be higher than anything we saw in FY22," said N. Kamakodi, MD and CEO.

In the fourth quarter ending March, nearly two-thirds of activity came from non-gold lending (₹1,935 crore).

"As we've come out of the COVID mindset...we're going to grow and the opportunities on non-gold lending look higher than anything we've seen in the past," he stressed.

Also on the anvil is the introduction of the bank's own credit card ahead of the first quarter earnings announcement. He said he received a proposal from "42CS", which handles cards from various banks across geographies.

The company would be the third-party service provider for technology and operational services on a profit-sharing basis.

"We will slowly and steadily begin to cover our existing customers. Final details are being worked out. Soon, we will also link portable devices to the credit card so that customers will want to use it more by enjoying all the benefits of the credit card," Mr. Kamakodi said.

According to him, the credit card is the only product missing from the bank's offer. Although the bank has partnered with SBI Cards to offer a co-branded card to its customers, it said it is now preparing to have its own credit card.

"We think it's time to launch our own credit card," he said. "The general consensus is that the ratio of debit cards to bank-issued credit cards is [in the range of] 3:1. We currently have 26 lakhs worth of debit cards which means our customers should have about nine lakhs worth of credit cards," he explained.

Credit growth for FY23 "is expected to be in the low to mid-double digits," he said. In the December quarter, the net non-performing asset ratio was 3.44%, compared to 1.47% a year earlier. Mr Kamakodi said the bank aimed to gradually reduce it to 2%