Uco Bank (NSE: UCOBANK) Q2 2025 Earnings Call dated Nov. 07, 2024
Corporate Participants:
Ashwani Kumar — Managing Director and Chief Executive Officer
Rajendra Kumar Saboo — Executive Director
Unidentified Speaker
Analysts:
Ashok Ajmera — Analyst
Sushil Choksey — Analyst
Amit Mishra — Analyst
Sarvesh Mutha — Analyst
Presentation:
Operator
Good afternoon, ladies and gentlemen. Welcome to UCO Bank Quarter Two [Phonetic] FY25 Earnings Call.
It is my pleasure to introduce to you the senior management of UCO Bank. With us we have Mr. Ashwani Kumar, MD and CEO sir; Mr. Rajendra Kumar Saboo, Executive Director; Mr. Vijay N. Kamble, Executive Director.
We’ll have opening remarks from the MD sir, post which we’ll open the floor for question-and-answer. Over to you, [Technical Issues].
Ashwani Kumar — Managing Director and Chief Executive Officer
Thank you. I welcome all investors and analysts to this post quarter two results.
Well, total business of the Bank grew by 13.56% on a Y-o-Y basis to INR4,33,704 crores, of which deposits grew by INR10.57 crore — 10.57% to INR2,75,777 crores. Advances grew by 18% to INR1,97,927 crores. Our RAM, total RAM stood at INR1,08,200 crores with a growth of 20% on a Y-o-Y basis. Under RAM, retail advances stood at INR47,039 crores with registering a growth of 29.36%, which was fueled by home loan and vehicle loan growth, home loan growth of 19% and vehicle loan growth of 38.66% respectively.
Agriculture advances stood at INR26,987 crores, with a growth of 17.41%, of which the contribution to the SHG portfolio, which grew by 33.63% on a Y-o-Y basis. MSME sectors stood at INR34,174 crores, registering a growth of 11.32% on a Y-o-Y basis.
Now coming to operating profit. Operating profit of the Bank for the quarter ended 30th September stood at INR1,432 crores, registering a growth of 45.82% on a Y-o-Y basis as against INR982 crores for the same period in the preceding year. For the half year ended, the operating profit stood at INR2,573 crores, registering a growth of 26% over the previous year. Net profit as on 30th September stood at INR603 crores as against INR402 crores for the same period in the preceding year, registering 50% growth on a Y-o-Y basis. For half yearly basis, net profit stood at INR1,154 crores against INR625 crores, registering a growth of 84% on a Y-o-Y basis.
Net interest income for the quarter ended 30th September ’24 grew by 20% on a Y-o-Y basis. For the half year ended September ’24, net interest income grew by 16% on a Y-o-Y basis. Net interest margin for the quarter ended 30th September 2024 on a global basis was 3.10% as against 2.84% for the same period in the preceding year. For the half year ended, the NIM stood at 3.09% as against 2.92% during the preceding year. The NIM was supported by — the NIM was supported by increase in cost of deposit, which grew by 32 bps, whereas — cost of funds grew by 32 bps, whereas the cost of — yield on funds grew by 52 bps. So that added to our NIM margin.
Coming back to asset quality. Gross NPA has improved to 3.18% as on 30th September 2024 as against 4.14% as on 30th September 2023, thereby registering an improvement of 96 bps over — on a Y-o-Y basis. Net NPA improved to 0.73% as on 30th September 2024, registering an improvement of 38 bps on a Y-o-Y basis. Provisional coverage ratio stood at 95.92% as on 30th September 2024. CRAR of the Bank stood at 16.84%, wherein Tier 1 was 14.59%. Then cost-to-income ratio has also improved to 56%. Fee-based income grew by 15% on a Y-o-Y basis and quarter-on-quarter basis by 10%.
Our non-interest income grew by 53% on a Y-o-Y basis and on quarter-on-quarter basis by 19%. Our SMA, more than INR1 crore portfolio is around INR1,500 crores, INR1,600 crores, which is 0.38% of our total advances. This was the overall performance of the Bank.
Now coming back to the guidance. We have given a guidance of deposit growth of 8% to 10%, where now the growth for this September quarter was 10.57%. Our CASA growth, again, we have given a guidance of 8% to 10%. CASA grew by 8.09% in this quarter. Credit growth, our guidance was 12% to 14%. Overall credit growth is 18%. Within the credit growth, RAM advances, I have already shared. Housing, retail, everything I have already covered. CASA percentage, Bank continued to maintain 38% CASA over last five quarters, six quarters. CASA has been hovering around 37% to 38%, and we continue to maintain this ratio. CD ratio of the Bank has improved from 67.25% a year before to 71.77%. Our target is to reach to 75%.
Slippage ratio during the quarter we had little higher slippage of INR800 crores plus. That was mainly on account of one corporate account slipping in this quarter against which — around — approximately around INR245 crores against which we have already made 50% provision for that. So this was all about guidance.
Now coming to certain initiatives which Bank has taken. In the previous year, Bank started with a performance management solution, PMS project for HR transformation, which was completed. Now Bank has started Project Parivartan, which is digital transformation project, where we will be digitizing our retail and — retail assets and liabilities journeys over a period of time. At the time of launch, we have started — new launches we have already made. UCO GST Smart Finance for — this is STP journey, Pre-Qualified Personal Loan, STP journey, KCC STP journey through JanSamarth portal. We have revamped Shishu Mudra STP journey. We have revamped our KCC renewal up to INR1.60 lakh STP journey. So all these five new journeys have already been implemented. And as on date now, total nine STP journeys are available at our — in our digital platform.
Looking forward, we plan to launch our 25 journeys by March ’25. And then remaining initiatives will be continued in the next year also. Bank has also participated in the global fintech initiatives like UPI Circle. Bank has already implemented that. UPI Lite Autopay top-up facility has been update — made live. Bank has also introduced loan repayment facility through BBPS. We have done tie-up with Swiggy, Zomato, Plutos for improving our visibility and debit card in the market. In order to strengthen our compliance and monitoring, we have started a new transaction monitoring vertical, wherein all transaction monitoring from various verticals has been combined into one vertical.
We have launched a Pulse program, that is a alert monitoring system, which is again a integrated alert monitoring system, wherein all the alerts from different channels are coming and our teams are sitting there to monitor those alerts. We have also launched new chatbot UDAY, that is Generative AI-based chatbot solution. We have also launched IVR in UCO Sampark 2.0, where our call center is now enriched with 31 different self-service options through IVR. And through IVR, we are able to service 89% of our customers. Bank has also revamped WhatsApp Bank — started revamp — revamped WhatsApp Banking. We are providing 35 services in five languages on WhatsApp Banking.
Tab Banking was introduced last year. Currently, we have tabbed, say, 1,698 branches, and we intend to cover remaining branches by March ’25. To garner more CASA and to give focus to female customers, the new initiatives were taken. We launched a new Pink — launched a Pink Basket, where three unique deposit products, exclusively for women, UCO Aparajita, a saving account, UCO Jaya Lakshmi, current account, and UCO Sanchayika Flexi RD account was launched with special features. UCO Udaan Scheme aims at providing financial support to meritorious female students for taking admission in premier educational institutions of the country with 1.10% [Phonetic] concession in rate of interest.
We have also introduced women-centric policy in the recently concluded Board meeting. We are providing a special concession to home loan female borrowers, concession of 0.05%. In MSME schemes also, 0.25% concession is given. All these — there are another — various other initiatives in IT and digital being undertaken. Bank has earmarked around INR1,000 crore budget for the IT, of which 36% has already been incurred and remaining we plan to incur in this half year. Many new projects are under RFP stage or under approval stage. So all those things will be coming in this remaining part of the year.
Thank you. And this is what I have to share with you. Anything thereafter, we’ll be open to question and answers. Thank you.
Questions and Answers:
Operator
Thank you, MD sir, for your opening remarks. We now move to Q&A session. [Operator Instructions] Question from the line of Mr. Ashok Ajmera. Please go ahead.
Ashok Ajmera
Good evening, sir.
Ashwani Kumar
Good evening.
Ashok Ajmera
Saboo [Foreign Speech], Kamble [Foreign Speech], good evening.
Rajendra Kumar Saboo
Good evening, sir.
Ashok Ajmera
And our compliments to you for the good set of numbers in this quarter also. Even the last quarter was also good, the first quarter as compared to some of the other banks. So good set of numbers, whether you talk about the operating profit or the net profit. And even the — your asset quality is also improving quarter-after-quarter. Having said that, sir, I have got just a couple of observations and some questions, sir.
On the credit growth side, though every bank is facing some issue on the credit side and as well as deposit side, in our case, if we take our target of 14%, because I will take the credit growth target of 14% being a UCO Bank and I know that you can perform. So our total credit should be around INR26,000 crores in the whole year. What we have done is only INR11,000 crores so far. So we are looking for about INR14,500 crores to INR15,000 crores of credit in the coming six months. So number one is that how sure we are about that, looking at the — our sanction pipeline and some of the projects which are in pipeline, the sanctions, and some of the amount which is under — in pipeline for disbursements? So how prepared we are?
And are we sure that yes, we will achieve this kind of credit target? Deposit, we’re some more or less, almost I think, we have out of INR15,000 crores — I mean, INR26,000 crores, INR15,000 [Phonetic] crores we have already got it and we need to get only INR13,666 crores. So mainly on the credit side, can you throw some light on this, sir, on this question, that how do we plan to grow our credit to the target of almost about INR26,000 crores this year?
Ashwani Kumar
It was INR36,000 crores [Phonetic]?
Ashok Ajmera
Yeah, yeah, INR26,162 [Phonetic] crores as per the target of 14% should be.
Ashwani Kumar
Yes. Yes. See, Ajmera ji, if you look at our growth, in both the quarters, we have grown around INR6,000 crores in each quarter, around INR6,000 crores.
Ashok Ajmera
Yeah, sir, 5.91% only in the six months, two quarters. Yes.
Ashwani Kumar
Yes, yes, 5.9% [Phonetic]. So our target is to reach to 14%, right? And you all know that second quarter — second half is always a busy season where the credit growth picks up. Now the festival season is also there. And a lot of traction in our home loan and retail loan product is already there in the vehicle loan. If you see our housing loan portfolio, around 19%, 20% growth is there. And in our car loan, around 38% growth is there. So these are the two major drivers for the RAM segment.
Coming to corporate, a lot of proposals we are getting in the corporate segment also. But wherever we are getting good margins, operating margins, only where — only then we are going for additional facilities. And the way the — currently, the projects and sanctions are already there, around INR8,000 crores sanctions are already there, which if we are able to meet our margin requirements, we’ll be giving a signal to release. So it’s — we don’t feel any problem, any issue in achieving our 14% growth target. Given an opportunity like currently we are growing around 18%. If you look at our credit growth in the last four quarters, five quarters, it’s around 14% to 18%. So given an opportunity, we may grow — we may achieve even a little larger number than the 14% also. We are quite confident in it, the way the pipeline is already built up with us.
Ashok Ajmera
Thanks, sir. Point well taken, sir. Sir, a little bit on the advances side, the quality. We have got very good recovery in this quarter in the — from the written-off account of INR520 crores. And even otherwise also, the things are under control as regard the slippages are also concerned. So I would just like to have — throw some lights on the coming six months, that are we going to maintain the same trend from the written-off accounts? And what is the pool of written-off accounts which we have, the total pool? And what do you expect in the remaining two quarters of the current year? Similarly, on the treasury side also, we are doing reasonably well. So are we expecting some kind of a windfall in the treasury? I mean, treasury also nowadays is basically is a part of the basic P&L. The income comes there as per the — because of the revised norms. So on the treasury side as well as from the recovery side, how optimistic we are, sir?
Ashwani Kumar
We had a recovery — this quarter we had a good recovery. And I expect that in the coming quarter also, we will have a good recovery from PWO because there is already one account, one big account where we are expecting some recovery in this quarter. So this quarter recovery will be more or less in the similar lines. Next quarter, pipeline is there, but we are yet to rationalize that and look at the pipeline properly. But if I look at the total recovery in this half year, that is INR1,729 crores from the write-off and total recovery and upgradation is INR3,000 crore — sorry, it was INR1,100 crores in this half year and full year is INR1,700 crores. Our endeavor will be that full year we continue to maintain that last year’s recovery at least, INR1,700 crores.
Ashok Ajmera
Okay, that’s good, sir. Just a last question in this round, sir. Some light on the restructured book, and what kind of provision on the standard restructured book which we are having? Or are we having any buffer provision apart from the IRAC norms? Because in the restructured standard book, there is some part of the COVID provisions also as well as non-COVID also. So some information on the overall, the provision on the restructured book, standard restructured, and as well as beyond the IRAC norms, if we are having any buffer of the provisions?
Ashwani Kumar
Sir, the restructured book, if you see, our restructured book has been coming down on a quarter-on-quarter basis. Now the total restructured book — give me a second. Our total restructured book stands at INR2,786 crores as against INR3,709 crores a year ago. So around INR1,000 crores reduction in the restructured book is there. And COVID restructured book has also — overall, COVID restructured book has also come down by INR800 crores, from INR2,500 crores to INR1,700 crores. We are maintaining normal required margin on the restructured book as per Reserve Bank of India guidelines.
In addition to that, we had maintained a provision of INR530 crores towards COVID restructuring provision, which we still continue to hold. We have not released that provision. That provision still continues to be in the books. Overall buffer which you was asking, overall buffer available to the Bank, including this COVID restructuring provision, which is over and above, that includes approximately INR1,000 crores. So INR1,000 crores is over and above the mandatory required provision which Bank is holding.
Ashok Ajmera
Okay, sir. Thank you very much and all the best to you, sir. I will try to come back again for some other minor — some information and questions, in case I get it. Thank you, sir.
Ashwani Kumar
Thank you.
Operator
Thank you, Ajmera ji. We have our next question from the line of Mr. Sushil Choksey. Sir, you’ll be unmuted.
Sushil Choksey
Sir, good afternoon. Congratulations on great stable result.
Ashwani Kumar
Thank you, sir. Thank you.
Sushil Choksey
Sir, my question pertains to — from your media interaction. I understand there was a single account which led to the impact on gross NPA and net NPA. Is the recovery number target of INR6,000 crore gross NPA, can’t it get better or you want to be conservative?
Ashwani Kumar
See, INR6,000 crores is our number which we have kept for ourselves. At that time, we have not expected this account to slip, right? Having this account getting slipped, even then we are continuing to maintain our number that we will be targeting less than INR6,000 crores of gross NPA.
Sushil Choksey
Sir, is it a telecom account of the government entity?
Ashwani Kumar
Yes.
Sushil Choksey
Okay. Sir, my next question is on your CD ratio and margin sustainability. And if you can throw some color on CASA, how are we shaping up? Because East India, I remember from earlier days, is a great source for CASA accounts. How are we working towards increasing CASA, keeping our margin stable between domestic and international book? With your sustainable growth in credit, which is likely to outsmart the number what you said, can I get some color on the growth path as well as on CASA?
Ashwani Kumar
See, if you look at our CASA, our CASA has been hovering around 37% to 38% over the last, I think, around one and a half years. So in spite of having huge pressure on CASA, we are able to maintain CASA. To garner CASA, we have taken a number of initiatives in the last year and the current year also. Last year, we introduced Tab Banking to reach out to the customers for opening their accounts. We revamped our saving — salary saving account with a tierized insurance product and other inbuilt incentives to deal with our bank or maintain savings account with our Bank.
Then we also introduced resource vertical at our head office level. And in this year, we have introduced resource vertical at the zonal office level also. We have made a zonal resource team where they are meeting customers, and around 300 odd staff members are engaged in reaching out to the customers at different zones and to open new accounts, to open new deposit accounts. We have also introduced special deposit scheme of 333 days with an interest rate of 7.30%. We have also signed MOUs with some of the PSUs for their salary accounts. So the focus on CASA is very clearly — as a result, we are able to maintain our CASA ratio of 38%. Number one. And another question, what’s…
Rajendra Kumar Saboo
Margins.
Ashwani Kumar
Margins, sorry. See, margin — if you look at my margin, a year before, our margin was 2.84%, right? Now we have improved to 3.10%. And from where the improvement has come? Just look at our cost to — our cost of funds and yield on funds. My cost of fund has improved from 4. — has increased from 4.47% to 4.79%. So that is a 32 bps increase. And whereas my yield on funds, that has improved by 52 bps. And how we have improved our yield on funds? That with the rebalancing of our loan products and portfolios, we have shed certain low yielding advances and we have concentrated on RAM segment, which is giving good yield as compared to the corporates.
You look at our ratings also, we have reduced our AAA rated advances and AA and A has increased and BBB. So that way we have tried to improve our yield on advances also and yield on funds also. So with these all — these all initiatives will continue in this quarter and coming quarters also. And our endeavor will be that we maintain our guidance, for which we have given — margin guidance, which we have given earlier.
Sushil Choksey
Sir, do you think interest rates globally and India have peaked? And treasury may reward handsomely, but where interest margins are concerned, specifically at MCLR, have we reached a peak or do you think it is still a passthrough system?
Ashwani Kumar
See, if you look at the current economic scenario, I think there is a downtrend in the rate-cut scenario in the different parts of the world. But given current situation of our country, economic situation, inflation, our RBI has not yet taken any call. I think once the economic scenario stabilizes in the country by way of inflation control, because inflation is the main target which RBI is looking at. So RBI that time once they’re comfortable, they may come out with a reduction in the repo rate also. That trend is likely to come. It is a matter of time. As soon as RBI is comfortable with the macroeconomic indicators, then they may come out. So far as the peaking of rate of interest, I think MCLR is now almost peaked. Maybe basis cost of funds in one month or two months, there may be somewhat upward revision by some of the banks, but more or less, it is now peaked.
Sushil Choksey
Sir, how are we benefiting in such scenario on the treasury profits in the second half? As your CD ratio is likely to get to 75%, that is what you are targeting, are we monetizing adequate instead of just increasing our resources and redeploying towards corporate credit or retail credit?
Ashwani Kumar
See, if you look at…
Sushil Choksey
If you could answer that question?
Ashwani Kumar
Yeah, [Foreign Speech].
Rajendra Kumar Saboo
So, Choksey [Foreign Speech], yes, always we are there in the market through our treasury and we look for the opportunities in the market. And I think the CD ratio target of around 75% is there and we have surplus liquidity as we have our SLR more than the required level of SLR. Wherever we get opportunity or we get the maturities, redemptions, we get those funds back, and then we try to redeploy into the credit to increase our NIM. As our NIM as you have seen improved, yield on advances has also improved. So overall, NIM will be improving if we can means deploy our funds into the better yielding advances.
But having said that, again, the investment portfolio will also means continue and we will not see any drastic changes there also because we have to maintain the SLR and surplus HQLA as well for the LCR guidelines. Profitability, where there is the opportunity, Bank is looking for the opportunity in the market. And not in a big way, but yes, as to the market trend, we are looking at the opportunities to book profit also wherever it is as per our means positioning in the market and our targets. So I think overall, the scenario as you have asked, the rate of interest scenario is still — it is still unfolding. In India, we are means yet to see the rate cut cycle start because the inflationary pressure are still there and RBI is waiting for the new data set to come into the picture. And maybe the other parts of the world they have already started cutting rates, but in India, we may have to wait for some more days. And if that rate cuts come, we all know that the investment portfolio will yield more profits if the rate is cut. So that we will see.
Ashwani Kumar
But that will go to the — not — that will not come to P&L.
Rajendra Kumar Saboo
Of course. If the new guidelines, AFS reserve is there, so P&L is only the HFT part. Whatever the clearly HFT part, pure HFT under the FVTPL, that will only come into the profitability. So that is limited means depending on the activity in the HFT portfolio.
Sushil Choksey
Sir, can I ask one last question? How much is unavailed credit which you have sanctioned today between corporate? And what is the target on retail in the current…
Ashwani Kumar
Sanjay ji [Phonetic], unavailed?
Unidentified Speaker
Unavailed?
Ashwani Kumar
Unavailed. Corporate.
Unidentified Speaker
We don’t [Technical Issues].
Ashwani Kumar
See, so, Choksey around INR8,000 crores is unavailed in the corporate segment.
Sushil Choksey
Okay, sir. Thank you for answering all my questions and good luck for the year.
Ashwani Kumar
As we are settling for the better rate of interest, if we are able to succeed, then we will discuss.
Sushil Choksey
Thank you, sir. Thank you.
Operator
Thank you, Sushil ji. [Operator Instructions] We have the next question from the line of Mr. Amit Mishra. Please go ahead, sir.
Amit Mishra
Hi, sir. Thanks for the opportunity. Sir, you mentioned CD ratio of 75% you are targeting. So by when we’re — we’ll achieve this 75%?
Ashwani Kumar
See, our intention is to achieve by March 2025. So that is the reason we have kept a lower guidance for deposit growth and higher guidance for the credit growth.
Amit Mishra
Okay. Sir, I was looking at your overseas loan book, which is around INR24,000 crores. And there are no NPAs in that book. So do you want to build this book or reduce this book? Do you have any target in your mind? What are the margins in — on overseas books?
Ashwani Kumar
See, again, overseas book, if you look at last two quarters, we have not grown the overseas book, right, basically, because we are not getting good margins. Once some good margin is available, definitely we will try to grow our overseas book also.
Amit Mishra
So what are the current margins on overseas books?
Ashwani Kumar
Current margin is around 1.4%, 1.5%.
Amit Mishra
Okay. And sir, your asset quality for the quarter was pretty stable. But just I wanted to ask, these agri slippages were higher as compared to last quarter or last year also. It was around INR206 crores as compared to last quarter of INR48 crores. So anything specific happened there? Because other — yeah, please.
Ashwani Kumar
Agriculture, actually, there is a phenomena that it happens on a half yearly basis, because its classification is on half yearly basis. So generally, if you look at September ’23 number, that time also agriculture slippage was quite high, INR140 crores — INR150 crores, last year same quarter. So it is in line with the previous year same quarter.
Amit Mishra
Okay, sir. Sir, one last question. How much is our loan gold book right now?
Ashwani Kumar
Loan gold book has touched around INR8,000 crores.
Amit Mishra
INR8,000 crores, gold loan book?
Ashwani Kumar
Gold loan book.
Amit Mishra
Okay, sir. Thank you. Thank you, sir.
Operator
Thank you, Amit. Any other questions, please raise your hand. We have our next question from the line of Mr. Sarvesh Mutha. Sir, please go ahead.
Sarvesh Mutha
Yeah, good afternoon. Sir, I wanted to ask about the corporate slippages. This time, they were around INR324 crores. So what exactly is driving that?
Ashwani Kumar
See, there was one corporate account having an exposure of around INR245 crores. That slipped in this quarter. So that has added to this corporate slippages.
Sarvesh Mutha
And how is the overall asset quality environment that you are forcing for the coming half year?
Ashwani Kumar
See, if you look at our SMA book, more than INR1 crores. It is — every quarter it is coming down. Now it is around INR1,600 crores, more than INR1 crores. I am talking about INR1,600 crores, more than INR1 crores, includes my SMA-0, SMA-1 and SMA-2. And that works out to around 0.5% of my book. So no big challenge in the current scenario when my SMA more than INR1 crores is very minimal.
Sarvesh Mutha
Okay. And sir, on margins, so we are probably on the rate cut horizon in India. And say if RBI does a 50 basis point rate cut in the next six months, so how are we positioned for that?
Ashwani Kumar
See, with regard to margins, in case the rate cut is there, definitely it will have some impact on the margins. But our strategy is to improve our CASA deposit and retail term deposit to reduce our dependence on the bulk deposit. So in that direction, the entire team is working. You will see that in spite of such a challenging environment, we are able to maintain our CASA at 38%. And I already explained that we have launched various new initiatives for the CASA and for the retail term deposit to attract retail term deposit. So I believe that in case we are able to improve our CASA position and retail term deposits, we’ll be able to counter or able to reduce the impact of rate cut on our NIM.
Sarvesh Mutha
Okay, okay, thank you.
Operator
Thank you, Sarvesh. We have our next question from the line of Mr. Sushil Choksey.
Sushil Choksey
Sir, on the retail mix, I see our home loan, vehicle loan, personal loan and others are growing, but looking at the growth pattern where UCO’s presence is, what are we enabling that this growth number which can be beneficial on CASA, cross-sell segment and various parameters, will be more sustainable with the higher trajectory?
Ashwani Kumar
See, Sushil ji, if you look at our retail growth, particularly housing and vehicle, we have been growing in housing around in last, I think, five quarters, six quarters from 17% to 20%. And in vehicle, we have been growing from 23% to 38% in the last five quarters. Definitely, it gives us a position — unique positioning wherein we are able to cross-sell or garner their CASA accounts also and third-party products also. So Bank is leveraging all these opportunities. Further what another initiative Bank has taken, Bank has introduced a retail hub structure, retail hub and MSME hub.
Previously, only select few branches, only one-third of our branches, not even one-third of our branches were attached to hubs. Now all branches are attached to the hub. We have retail hub, we have MSME hub. So all branches are now in the development role, the business development. So they are garnering leads and the leads are being sanctioned by the hubs. So definitely when they have ample time available at their disposal, when they have to sanction, they have to only simply generate leads. So lot of cross-sell and up-sell opportunities are available with the branches. And I believe our branches will encash that opportunity and leverage our growth in retail and MSME and housing and particularly car loans.
Sushil Choksey
Sir, my next question is the transformation journey started by the current management team of both the EDs and yourself, what is the digital spend you’ve already achieved? How much is left? And when do you see that entire initiative and the transformation journey would be starting to benefit the Bank, whether this year or next year?
Ashwani Kumar
Yeah. See, transformation journey will help the Bank in the next year in a big way. Current year, we have started — just now, around a month back only we have started our transformation journey, Project Parivartan, wherein we have taken an ambitious target of our 25 — digitizing 25 journeys. So all those journeys, first we have to develop, deploy. We have to go to the branches for the mindset change by reaching out to the customers to subscribe to our digital products. We have already identified Digi Champs at the branch level who are equipped with the latest updates on the journeys which we are working on.
And they will be reaching out to the customers for creating awareness about the digital journeys. I think next year will be our big year when we will see our digital balance sheet also on our map. So once the awareness — once the journeys and then awareness, both the things are available, then digital balance sheet will be starting from the next year.
Sushil Choksey
Sir, I am going back to my earlier question which I asked in the first round. My assumption is that 10-year yield will trade between 6.50% [Phonetic] and 6.70% [Phonetic] in the last quarter of the current year, that is between January and March. The RBI interest rate cut cycle will start in January to March, but not suddenly. MCLR, I assume you would be at a similar rate of 8.9% to 9%. How much of arbitrage possibility are you sensing between your treasury book and a corporate book, where your yield on corporate may be somewhere around in the vicinity of 9%, subject to not lending to NABARD, NaBFID and government companies, but more on private sectors, our MSME portfolio which is trending? And retail loan you might be doing at 8.4% [Phonetic] to 8.7% [Phonetic]. So how much of arbitrage possibility is there to balance between both?
Ashwani Kumar
See, if you look at our investment book, we have a good amount of investment which is beyond our required limit also. As and when opportunity is coming, we are liquidating the investment also. Recently also, we have taken a call to liquidate our investment prematurely and we have booked profit also a little bit, and then we have utilized that money in lending to the mid corporate and retail segment. So definitely there is a good arbitrage opportunity available when the treasury bill, G-Sec rates are coming down, and we can lend profitably all those funds to our customers. So Bank will continue to look at those opportunities in the remaining part of the year also to take the benefit of lower yield when we can liquidate our investments and deploy them in the credit market.
Sushil Choksey
Say any thinking process on buying corporate bonds which are yielding 9% kind of rates?
Ashwani Kumar
That process is always going on. We have been buying corporate bonds at regular intervals wherever we feel that good yield is there and less risk is there.
Sushil Choksey
Okay. And secondly sir, I had asked you a question on how much is our digital spend left in terms of value?
Ashwani Kumar
So digital total IT spend was INR1,000 crores, out of which I think INR360 crores odd we have already completed, orders have been placed. Remaining INR600 crores projects are already in pipeline. They are in RFP stage or some are in evaluation stage, some are in approval stage. So I believe by the end of this year, we will be through with this INR1,000 crores of budget.
Sushil Choksey
Sir, thank you for answering all my questions and best wishes to team UCO for big positivity.
Ashwani Kumar
Thank you.
Operator
Thank you, sir. We would be taking that as the last call for today. I would like to thank UCO Bank for giving this opportunity. MD sir, any closing remarks?
Ashwani Kumar
So Bank has been positioning itself in the digital area now. Earlier we worked on the HR transformation. Now the Project Parivartan has been initiated, and we expect that the Project Parivartan will give the results in the next year. When we will be launching, we will be through our journeys by the end of this year. Bank will continue to maintain its guidance in the quarters to come. And we will make sure that whatever guidance we have given, we achieve that guidance in the quarters to come. Thank you all the analysts and investors for joining our quarter two results conference. Thank you very much.
Rajendra Kumar Saboo
Thank you.
Operator
Thank you, sir. Thank you for — to the management of UCO Bank for giving Antique Stock Broking this opportunity to host the call.
[Operator Closing Remarks]
Ashwani Kumar
Thank you.