United Bank expects Rs5.5 billion capital by March-end

State-owned United Bank of India expects Rs5.5 billion of capital from the government by March-end and hopes to comfortably achieve the Reserve Bank's credit growth target of 18% in 2009-10.

"We have asked for 550 crores (Rs5.5 billion) from government and hope to get it before the end of this fiscal," chairman and managing director Bhaskar Sen said on Thursday.

The bank's capital adequacy ratio was 11.44% as on December and additional funds would help boost expansion plans, Sen said.

Currently, corporate loans make up 52% of the loan portfolio of the bank, while retail loans were 12% and small business loans were 15% of the loan basket, he said.

The bank will focus on corporate and retail loans, though it was yet to fix a loan growth target for next fiscal, Sen said.

The lender also plans to improve its net interest margin from 2.07% as on December by increasing share of low cost current and savings accounts, he said.

The bank's share of low cost accounts was at 34% of the deposit portfolio.

The eastern India based lender also plans to open 70 branches next year, some of it in the north eastern part of the country.

It also plans to sell one billion of non-performing assets by March-end to asset reconstruction companies, executive director TM Bhasin said.

"We are in final stages of evaluating the bids," Bhasin said.

United Bank of India on Thursday listed at Rs76 on the BSE, 15.15% higher to its issue price of Rs66 a share.

The shares touched a high of Rs77 in early trades.

"The listing was in line with what we expected. We expected a 10-15% upside on the stock," said Amit N Rane, analyst with Angel Broking.

Rane said it would be difficult to factor in how much government will infuse in the bank as there is no clarity of federal government's fund allocation plans for state-run banks.

At 11.33am, shares in United Bank of India were trading at Rs71.75, up 8.71% from issue price, in a flat Mumbai market.