Union Bank of India Ltd (NSE: UNIONBANK) Q1 2026 Earnings Call dated Jul. 19, 2025
Corporate Participants:
Ajay Bansal — Deputy General Manager
Sanjay Rudra — Executive Directors
Nitesh Ranjan — Executive Director of Tech, Innovation, Strategy, Accounts & Compliance and Executive Director
Avinash Prabhu — Chief Financial Officer
Unidentified Speaker
Analysts:
Ashok Ajmera — Analyst
Mahrukh Adajania — Analyst
Jai Mundhra — Analyst
Rakesh Kumar — Analyst
Ashlesh Sonje — Analyst
Gaurav Jani — Analyst
Unidentified Participant
Sushil Choksey — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Union Bank of India Earnings Conference Call for the period June 30, 2025. The bank is represented by the Executive Directors Srini Nitesh Ranjan, Srini Ramasubramanian S, Sanjay Rudra and other members of the top management. [Operator Instructions]
I now hand over the call to Mr. Sanjay — sorry, Mr. Ajay Bansal, Deputy General Manager. Thank you, and over to you.
Ajay Bansal — Deputy General Manager
Thanks. Good afternoon, ladies and gentlemen; Ajay Bansal, Head of Investor Relations, Welcome you all for Union of India Earnings Call for the period ending June 30, 2025. The structure of comfort shall include a deep opening statement by respected ED sirs and close will be open for interaction.
Before getting into the con call, I will read out the user disclaimer commitment. I would like to submit that certain statements that may be discussed during the investor interaction may be forward-looking statements based on the current expectations. These statements involve number of risks, uncertainties and other factors that cause the actual results to differ from the statements. Investors are, therefore, requested to check the information independently before making any investment or other decisions.
With this, I now request our respected ED sir for his opening remarks. Thank you, and over to you.
Sanjay Rudra — Executive Directors
Yeah. Good evening, everyone. Thank you for joining this con call for Union Bank’s Q1 FY ’26 results. To begin with, let me just give a backdrop of the operating environment for the quarter ended June 2025. As you are aware, on the global front, there were significant economic uncertainties coming from geographical tensions as well as trade dynamics and which is posing risks to the global growth while at the same time, the macro recurring fundamentals of the country remain quite strong, and India is expected to remain amongst the highest growing economy in the world during the current year also.
On the monetary policy front, RBI front-loaded policy report rate. And also in the last policy, they have announced the road map for the reduction in cash reseratioby 100 basis points, which will kick in during the current quarter. With this backdrop, let me also share some of the key highlights of the performance for quarter ended June 2025. As of June, bank’s overall credit grew by 6.8%. And within that, the RAM segment registered a growth rate of 10.3%. Retail loan book grew at 26% and MSME at 18% reflecting strong momentum in our focus in the priority year.
On the deposit front, growth was a bit moderated, and that was our strategic call for reducing the bulk deposits. You will notice that from March to June 2025, we have reduced our bulk deposits by close to 7% while we continue to operate at a comfortable CD ratio of around 76%. Within deposits, retail term deposits showed a very good growth rate of around 12% Y-o-Y for 30th June 2025. CASA ratio remained stable at 32.5%. And CASA plus the retail term deposits share in the overall deposits again remained steady at 74%. And on the asset side, the RAM portfolio contribution stood at 56%, in line with our guided range. On the financials, net profit for Q1 FY ’26 grew at a rate of 12%, amounting to INR4,116 crores.
On the return on assets, we have continued to perform more than 1% at 1.11 for Q1, which is again better than 1.06% in the same quarter last year and return on equity loss stood over 15%. There has been some moderation in the net interest margin, which also — which we also guided through in the last con call. For Q1, the net interest margin has been 2.76%, which is about 11 basis point moderation from Q4 FY ’25.
Capital adequacy ratio remains quite strong at 18.3%, with common equity at 15.3%. We have also seen a marginal reduction in gross NPA ratio and net NPA ratio and it’s moving towards our guided range. At the same time, provision cover ration improved by 116 basis points to close to 95%. There has been a reduction in the credit cost. Now it was 47 basis points for Q1. Also, the slippage ratio was less than 1% for Q1 FY ’26, which is a continuing downward trend over the last many quarters.
Gross recoveries again outpaced the total slippages in Q1 FY ’26, and we expect the same trend to continue. At the same time, the bank has been taking several initiatives in the area of digital banking, HR initiatives as well as participating in the overall PSB reform agenda. As we have shared earlier, there is an EASE program running for all the 12 PSBs. And for the EASE of last year, that is quarter ended March 2025. Union Bank stood at third rank amongst all the public sector banks, and we continue to remain top three amongst many of the sub teams of the EASE.
With this, I’ll just take a call, and we’ll open for the Q&A. Thank you.
Questions and Answers:
Operator
Thank you very much, sir. We will now begin with the question-and-answer session. [Operator Instructions] The first question is from the line of Ashok Ajmera from Ajcon Global. Please go ahead.
Ashok Ajmera
Thank you for this opportunity. Thanks for your opening remarks, sir. And in the opening remarks, you yourself said that Indian economy is the highest growing economy, and we are doing well on the economic front. But if you look at the performance of the bank, I mean, we are contradicting the positive statement. As the bank is continuously going in the negative zone, I mean total degrowth everywhere. Like if you see even yearly numbers have come down to 6.8% in the credit growth. And if you look at quarterly, you have degrown actually, either we have become too risk averse.
Our risk department is at our credit appraisal and everything has become too risky because in spite of having a good pipeline of the disbursement and sanction still we are not growing. This is a major concern of the bank that we need to do banking. Similarly, on the recovery front, also this quarter has been very dismal, sir, whether you talk about the cash recovery which has gone down substantially from last quarter of INR1,600 crores to only INR790 crores. Even the upgradation, INR519 crores in INR94 crores and even if you take the recovery from written-off account, it has also gone down tremendously than the last quarter. So recovery front and credit front, as well as the treasury front.
Many other banks are taking comfort at least from the treasury profits. If the real profits are not there. But here on the treasury also, if you look at the segment-wise, I mean our profits are less than even the last quarter. So I would just like to know, sir, where are we heading? Are we still maintaining gross targets or we are lowering them down towards degrowth and somehow, the profitability is a little bit maintained, though it is lower than the last quarter by almost about INR900 crores. Really, in a realistic way, I would like to know, what is actually wrong with Union Bank now for some time.
Ajay Bansal
Yes. Thank you, Ashok. I have to assure you that there is nothing wrong with the Union Bank of India. If you’re looking at it, we have right the initial remarks, Mr. Nitesh has told, this is about margin — protecting the margin also has to be Lucento. So we have seen that there was a large rate cut has been given and which has been immediately passed on to around 46% of our loan book, which are covered under the dealer. So certainly for also to protect the margin of the bandwidth today to an extent, we have to see that our low-cost advances, we are not renewing our — again, reducing cost advances doing it. If you look at our growth, a growth is quite healthy. If you see that our MSME has grown by around more than 17%.
Our retail has grown though it is aged by the gold loans which is around 25%. So we are growing in those areas. The only thing is, yes, as you are correctly told, the corporate, the thing is very — rate of industry is very competitive. Because of that, we have to see that the market best [Phonetic] we will be able to — you have to pay off between the margin also and also year growth, we are trying to manage both the things. So we are in the same push on, sir, actually speaking, been when the things have been settled and when the rate cuts have been passed and we are able to reduce our cost of capacity to a large extent, certainly, we will be back in the market of corporate credit where we’ll be able to show a good growth.
Sanjay Rudra
Yeah. Really, one thing which I would like to tell you about what you said about the treasury income has declined. Basically, if you see the real treasury income is one of the best in the last many quarters. The treasury has booked a profit of INR1,418 crore in June ’25 as compared to INR1,646 crores of March ’25. And June ’24, it was INR1,026 crores. Basically, March ’25, if you remember, there was provisions were there to the extent of INR793 crores.
As per the RBI guidelines, those was write-back was taken. So the profit was INR1,646 crores. If I exclude that INR793 crores of SR provisions then the profit was actually INR853 crores. That’s a substantial improvement in the treasury. But again, as you know, this treasury profit is basically dependent on the market, how the market builds accordingly the profit is booked. Second thing about the overall, you said the operating profit has gone down by INR950 crores basically, last June ’24, we had a PSLC income to the extent of INR950 crores, that was the major income one-off item which happened in the last year. And this is since the opportunity to — was not available. So that profit is not added here. That is where the operating profit is slightly lower than the June ’24 quarter.
Otherwise, on the profit front, I feel that bank has done very well. And as Raman was saying about the protecting the income because you know that the rate was is going on in the market. And what sort of portfolio should take at what pricing we should take that challenge always a challenge, and we have taken a conference call on the portfolio also. And we don’t want to take new advances where the bank may incur a loss in futures. That is really the growth is slightly muted.
Ashok Ajmera
From the recovery front, and if you look at even SMA also, our SMA numbers, also SMA2 has gone up from INR1,200 crores to INR2,600 crores. That is SMA-2, which might slip to NPL. Our overall SME in this quarter has gone to INR4,917 crores as against INR3,835 crores. So even on that front, even on the recovery front, the cash recovery is half in the last quarter. So I mean on every such okay, I can understand the treasury, what explanation you’ve given. What is about SMA and recovery?
Ajay Bansal
In SMA also, SMA, I see there are a few accounts where the impact is there. But the past train also say these accounts are repayments are coming, though due to certain reasons, these accounts are appearing under the SMA 1 and 2 — but then again, the recovery is coming because these are having a good support of the government also.
So I don’t think there is any problem as far as the MSME numbers, I understand that there is a marginal increase in — but — and in the first quarter is always the muted recovery, but bank is making all-out efforts — and some of the recovery, which was supposed to come in the quarter of June because of some of the NCLT decisions are pending and that has not materialized in the June. And most likely, it will — that will materialize in September. So it over also front, the bank is very active and doing well. And some of the results, which is not seen in June quarter will definitely be seen in the September quarter. Thank you.
Ashok Ajmera
By around INR12,000 crores.
Operator
Mr. Ajmera, sorry to interrupt you, sir. Sir, I would request you to kindly rejoin the queue for follow-up questions. We’ll take the next question from the line of Marhrukh Adajania from Nuvama. Please go ahead.
Mahrukh Adajania
Yeah, hello. Good afternoon. I had a couple of questions. Firstly, how much of your deposit retail deposits would have already repriced? I know there’s it’s over a year of repricing. I mean the repricing cycle, but how much 15%, 16% — how much of your term deposits would have already repriced? That’s my first question.
And related to that, where do you see the bottom of your margin? I know that you may have a full year margin guidance but they may fall and then they may rise. So where will the fall settle? That’s the second question in your assessment. And then again, related to that, so the current account deposits have declined very sharply. I know there has been some reclassification as was evident by their business update you gave a few days ago. So is it fair to assume that it was these deposits, which caused the March ’25 numbers to change in the 1Q business update. So where the current account deposits reclassified as borrowings? So that’s the spread related question.
And then I have one PSLC question. If you could explain why the PSLC income fully disappeared or disappeared? And then with the new clarification on the gold loan circular, in what quantum do you see it coming back and when? So these were my questions.
Ajay Bansal
Yeah. So I think roughly, if I take on the base of March ’25, close to 20% of the retail term deposits would have got repriced as of now because roughly 80% to 85% of repricing is happening during the year given the average duration of the retail term deposit is around 1.2, 1.25 years. That is number one. On the reclassification, it is more on the deposits in the foreign branches and which was disclosed also while we disclose the provisional numbers. So far as current deposit is concerned, while you are comparing with the March numbers in March, there is some flow also into corporate and government accounts because of that, that number is high, which is not with a similar extent in the boom [Phonetic] quarter. So that is the usual thing. March numbers are generally high in the current account.
Yeah, yeah. On the margins, as I said, for the full year, we are expecting 20 to 25 basis point impact on the margin. 11 basis points we have already witnessed in Q1. And in the road map, while if I look at what could be the minimum that we can hit, maybe somewhere between 260 to 265 is a range where we can hit at the minimum level. And from there, we should be able to bounce back effectively around 20, 25 basis points for the year. And on the PSLC, this quarter, we have not done any PSLC. We are aware of the guidelines of the Union Bank of India, and we are evaluating it as a part of our business strategy. And going forward, if the opportunity comes and we feel this is a good income to book, we’ll be doing that.
Mahrukh Adajania
Okay. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Jai Mundhra from ICICI Securities. Please go ahead.
Jai Mundhra
Hi, good evening, sir. Two questions. The first is there is a standard asset provisioning of INR46 crores while, of course, the loan book growth has not been that high. If you have — is there any chunky loan or is this something specific if you can elaborate this?
Sanjay Rudra
Good evening, Jai, particularly in the — because some of the assets, which we built that were the ICA was not implemented. There is no overdue as on date, but you are required to maintain a higher provision. So these accounts where we have made some provisions as per the ICA value. So that is why our standard provision has gone up.
Jai Mundhra
Okay. And sir, these are like — these are private accounts, right, not the state government or quasi-PSU account?
Sanjay Rudra
And these are not private companies.
Jai Mundhra
So these are state government/quasiPSU entities, right? I mean the there was.
Operator
Please go ahead, sir. Sir, you’re not audible right now. Can you please unmute on the management’s line. Sir, may I request you to kindly unmute yourself as you speak.
Jai Mundhra
Sorry, you’re asking to the management, right?
Operator
No, yes, Mr. Mundhra. [Phonetic]
Jai Mundhra
I’m asking to the management.
Operator
Ladies and gentlemen, please hold the line while I check your connection for the management line. Thank you. Yes, ladies and gentlemen, please hold the line while I check the conneciton for the management’s line. Thank you. [Technical Issue]
Ladies and gentlemen, thank you for patiently holding the line for the management has been reconnected. Thank you, and over to you, sir. Mr. Mundhra, you may proceed now.
Jai Mundhra
Yeah. Hi, sir. Sir, I was asking the ICA accounts, these are private entity or these are the state government just to assess the risk?
Nitesh Ranjan
Okay, sure. So these are not private entities.
Jai Mundhra
And sir, related to this — I mean, on standard accounts, I mean in the last — I mean, have you done any OTA or can we do in OPS in the standard account?
Sanjay Rudra
Which accounts you are talking about?
Nitesh Ranjan
OTS in standard account?
Sanjay Rudra
Yeah. As per the present policy, we don’t go for any settlement with — this was not very clear. You said as per your policy, you don’t do.
Jai Mundhra
And lastly, sir Rudra, I think you mentioned about this PSL and now when the norms have been changed — whatever issues that you had, you can resume the PSLC transaction fee transaction or it could still be some time away before you resume the PSLC income?
Sanjay Rudra
Yes, we can definitely book some — in days to come, we can book some profit, but major income of PSLC comes, if we do it on the first quarter of the year because that then the emissions and premiums are the highest. In the subsequent quarter, it comes down slowly — and second quarter, third quarter onwards. So if there is some further improvement happens in our portfolio, then definitely, we’ll be able to book some profit on account of the PSLC.
Jai Mundhra
And sir, lastly, on the yield, if you can share the share of MCLR, EBLR and TV in portfolios. And in your asset, and in your assessment, sir, how should one look at the residual impact of one rate cut on the yields on all on sales. So should the — this quarter yields and advances are down by 22 basis points. Should this decline by similar quantum or higher quantum or lower? Thank you.
Ajay Bansal
We have almost 48% of our portfolio is under EBLR. So their complete rate transition has already happened. And remaining 42%, we have our MCLR linked way and 10% other rates are there. So in case of the EBLR transformation has already happened, and that has given the impact of around 11 basis points. So even if in the subsequent quarter also, the MCLR also already, we have reduced our MCLR by 15 plus 10 basis points of total reduction in the MCLR also has happened to the extent of 25 basis points.
Subsequently, I don’t think there will be much reduction on the MCLR effect. Even if the MCLR happens, then also our maximum impact on the NIM will be to the extent of not more than 20 basis points for the September quarter. But as you know that there is 100% CRR cut — is 100 basis points is already announced by RBI in the second half. So that will compensate our interest loss most likely, we’ll be able to manage between 10 to 15 basis points of reduced NIM as compared to our March ’25.
Jai Mundhra
Okay. Sure. Thank you so much, sir.
Ajay Bansal
Thank you.
Operator
Thank you. We’ll take the next question from the line of Rakesh Kumar from Balances Advisors. Please go ahead.
Rakesh Kumar
Yeah, hi. Thank you. Thank you, sir. So firstly, sir, on PSLC, just a clarification that last year, we had sold around INR50,000 crores of small and marginal farmer PSLC. And we could get the income of INR1,100 crores kind of number. And it was like kind of in the first quarter itself, I think. So one thing is that because of agri gold, does it really impact your SMF PSLC thing?
Ajay Bansal
Most of the agri loans are below INR2 lakh actually. And given the small and marginal farmer but particularly, the RBI came out with a guideline that are to INR2 lakh loan cannot have any collateral facility and goal is also considered to be the collateral security in that case. This guideline has been revised by RBI just recently. And that is wage that the small and marginal farmers in agri was reduced. And overall portfolio of the has come down by 9%. That has — because of that, we are not able to sell any PSC in the first quarter.
Rakesh Kumar
So probably like looking at Indian Bank, Canara Bank, they also do a lot of PSLC income and generally in the first quarter and sometime in the fourth quarter also. So looking considering what peers are doing on the PSLC front and at yourself. It gives us a feeling that, that kind of income might not come in this full entire year?
Ajay Bansal
Yes. If you say whether we’ll be able to get the INR950 crores of income through considering the present situation and the available portfolio, we don’t foresee the same type of income. But definitely, going forward, there may be some income will be generated on PSLC sense. What will be the exact amount and all these are, again, the market determined rate and the risks are not manifested at any point of time. So based on the market only, we’ll be able to book some profit.
Rakesh Kumar
Very clear. And sir, this interest income on tax refund, which was not there in the first quarter previous year, this quarter also, we have a very small number and full year, we had around, again, INR1,000 crores kind of a number in the previous fiscal year. So could we do that and achieve that kind of number in the rest of the fiscal year FY ’26? Is it possible or that number would also remain kind of weak or absent in the remaining quarters?
Ajay Bansal
Yeah, our CFO will reply to this.
Avinash Prabhu
So as far as that is concerned, it’s — we do have an estimation that there will be interest on income tax refund during this year. And we are quite comfortable in terms of being close to the INR500 crores to INR1,000 crores mark. So that is fine. And as far as your earlier question on PSLC is concerned, while that may not materialize, but we have looked at alternatives available. So we will be able to make up that fee income from other teams. So we do have a plan in place for that.
Rakesh Kumar
So from PSLC itself, you will make up because you are.
Avinash Prabhu
Not from PSLC, we will be able to make it up through other avenues of non-interest income.
Rakesh Kumar
Got it. And one thing, like when we do the recovery of written-off accounts and whatever the income — interest income we get from — that proportion has been coming down as the number of total recovery being done on the return of book — so that number progressively has been coming down. So what is the structural change that is happening that interest income on the written-off recovery number? Why that ratio is falling?
Ajay Bansal
No, that is not the interest on written-off accounts. Basically, that is the interest on the NPA accounts as per — which is recovered. So whenever the settlement is happening towards the principal amount and if it is — if it is — recovery is coming through a settlement, then interest recovery will be less. And if recovery is through without settlement in the sense, if part amount is paid by the borrower, then that will be adjusted towards the interest. And if the recovery is coming through the surface actions, then again, it will go towards the interest. But since — in that case, what is happening, actually, if you see the recovery is getting delayed.
So what the bank also decided to go for some OTA settlement, it is the best recovery mechanism, where the recovery percentage of recovery is also good. So instead of waiting for a long period, we are going for the settlement and where the recoverability is better. So that is where the interest income on NPA is coming down. However, bank is working on that for any improving that income also.
Rakesh Kumar
But just correct me if I’m wrong, like that this interest income recognition from the recovery would include the written-off as well as the NPA. It will not be only the NPA
Ajay Bansal
It is — in case of the written-off, whatever the income is it in written off also, you don’t get the 100% dealer. Once the 100% recovery will happen. Yeah, just hold on.
Avinash Prabhu
See, there is a difference. If you recover interest from a written-off account, it will go to other income. If you recover interest from an NPA account, it will go to interest income.
Rakesh Kumar
Correct. Because why I’m asking a little because you — just last question, ma’am. Just last question, ma’am — because in absence of all these nonrecurring numbers, the ROE is looking quite weak. So as compared to 1.25% ROA number last fiscal year, how do we see that number now in this FY ’26?
Sanjay Rudra
No. So even last year, we’ve given last year, which is for 24%, 25%, we had given a guidance that our ROE will be above 1%. And this year also, we will aim to have an ROE, which is above 1%. That is something that we’ve also conveyed to our investors and analysts in the first quarter.
Rakesh Kumar
Got it, sir. Got it. Thank you so much, sir. Thank you.
Operator
Thank you. The next question is from the line of Ashlesh Sonje from Kotak Securities. Please go ahead.
Ashlesh Sonje
Hi, team. Good afternoon. Sir, firstly, on your — I see that you have taken savings account rate cuts in the month of July. Can you tell us what is the effective cut in your overall SA deposits because of this cut?
Sanjay Rudra
SA, we have reduced by 25 basis points.
Ashlesh Sonje
Sorry. So you’re saying the overall SA rates would be down by about 45 basis points?
Sanjay Rudra
25 basis points.
Ashlesh Sonje
Understood. And secondly, if I look at your slippages in the MSME segment, they have remained elevated this quarter as well. Last quarter, you had indicated that they were high because of some logic changes, but they have not declined in this quarter either. Can you give more details?
Sanjay Rudra
And this quarter, overall slippages number has come down as compared to the previous quarter. But yes, as you say, there is a marginal increase in the MSME NPA percentage has increased from 4.14% to 4.39%. But overall, slippages has come down. And we are able to manage the large corporate also, there is a decline and the retail also, there is a decline. But in MSME also, there is no large slippages are not there. It’s a nominal stages has happened only.
Ashlesh Sonje
Understood. Okay. And sir, on your MCLR-linked loan book, I understand that you have taken cuts in the MCLR rate now. But would there be any part of the book which would still be repricing upward in this — in the June quarter?
Sanjay Rudra
No.
Ashlesh Sonje
Understood.
Ajay Bansal
No, sir.
Ashlesh Sonje
Okay. Thank you.
Operator
Thank you. The next question is from the line of Gaurav Jani from Prabhudas Liladher. Please go ahead.
Gaurav Jani
Thank you for taking my question. I just had a question on the yields and related to the kind of sequential loan growth that you guys have seen. So on a sequential basis, we have seen a sharp decline in corporate while retail is doing well. Having said that, the yields have come up by about 25 bps quarter-on-quarter. So what would explain the sharp reduction of yields despite of a decent growth in retail? And corresponding to that, I mean, there’s another component of retail, which has been growing pretty sharply. So what to constitute that there? That is my first question.
Avinash Prabhu
The second question I could not get if you can repeat, but let me first respond to the first one. See, that 20-odd basis point reduction in yield that you’re talking about is basically reflective of ER change, which is by the 100 basis points. And as we said that close to 50% of the loan portfolio is on EBLR, where the pass-through has been immediate, — and in fact, also on the MCR loan book in phases, till now we have already done 25 basis points of reduction. That is a key reason of fall in the indadvances and you are very much aware that in a declining rate scenario, the first impact is on the asset side. And then with a lag, it comes on the deposit side. Second one, can you please repeat?
Gaurav Jani
Yes. Just to harp back on the one. So my sense is, I agree with you that there’ll be a you know yield reduction because of the DR more that will be pushioned by the mix change, right and pushioned by the loan mix change.
Avinash Prabhu
Yeah, sir, just to hop back on the previous one. So my sense is, I agree with you that there’ll be a yield reduction because of the B repricing that will be cushioned by the mix change, right?
Gaurav Jani
Cushioned by?
Unidentified Speaker
The loan mix change.
Avinash Prabhu
There has not been significant loan mix change that does not happen within a quarter. So if you look at our retail book, RAM book total, it continues to be around 55%, 56% of the total portfolio. We are trying to introduce and some loan mix change, but that will take some time.
Gaurav Jani
Sure. And sir, your second question was the other part of retail has been growing pretty strongly. A year ago, it was almost half, right, INR1,000 crores to INR76,000 crores. So what contributes to this growth?
Avinash Prabhu
No, see. See, some of the gold loan is also happening in the retail loan portfolio. That is what is reflective in the other segment of the retail loans.
Gaurav Jani
Okay. Okay. Can you quantify the gold book, sir, right now versus a year ago?
Avinash Prabhu
Today, we are around INR83,700 crores in the gold loan book as of 30th June.
Gaurav Jani
And what would that number be a year ago?
Avinash Prabhu
Closer to that, I think, around 84,000 crores something.
Sanjay Rudra
One year back, it was around 70,000 June ’24
Unidentified Speaker
June ’24 was INR78,000 crores, and now it is INR83,700 crores.
Gaurav Jani
Okay. Understood. Sir, last question, sir, on the EBLR side, right? So we have an immediate reprice that T plus one? Or is it 30 or nine? How does it happen sir?
Avinash Prabhu
No. So you can say it is immediate. It’s a matter of two, three days kind of things because there is a internal ALCO date and the policy date. That difference could be two, three days. That’s the only thing.
Gaurav Jani
Understood. That is it from my side. Thank you so much.
Avinash Prabhu
Okay.
Operator
Thank you. The next question is from the line of an Mann Solanki [Phonetic] from RSP Ventures. Please go ahead.
Unidentified Participant
Hello, sir. Sir, I have two questions mainly first on the income side that what is the recovery target from the write-off for a full year ’26? Can you guide that?
Avinash Prabhu
Total recovery target for this year is — see, we have not given the guidance. But as I said in my opening remarks also, that the gross recovery for the quarter has been higher than the slippages, and this is a continuing trend. And we expect to maintain this trend. I also said that the delinquency ratio has come down below and it is again on a downward trend for past many quarters. So I think without giving guidance, you can make out the direction where we are moving.
Unidentified Participant
Okay. And the other one is that if we see the cost-to-income ratio, it is increasing from the last two quarters. So is there any change, it is the same with quarter four, I mean, it should be declined because quarter four has some one-off expenses. So it should be decline but it is still the same, still increasing.
Avinash Prabhu
The cost-to-income ratio, it is also influenced by the net interest income. And since we are already telling that there is an impact on the NIM and the net interest income because of the changing interest rate scenario. Because of that cost income ratio has little increase to around 49%. But given the rebalancing, which will happen over the period of a year or so, I think we should move back to lower level. But this is greatly impacted by the current interest rate scenario, and it’s pass-through.
Unidentified Participant
Okay. And the last one that you have mentioned the MCLR rate cut by the 25 bps, right?
Avinash Prabhu
Yes.
Unidentified Participant
So is there any future in quarter two or quarter three, how much do you expect that the MCLR will fall down? Is there any future expectations by management?
Avinash Prabhu
See MCLR is based on the changes in the marginal cost of. So expecting that there will be further reduction in the device rate if the market scenario permits that we can expect maybe over the next six months, 25 to 35 basis point further reduction in MCLR is possible. But it all depends on all the competitive interest rates move in the system.
Unidentified Participant
Okay. Thank you, sir.
Operator
Thank you. The next question is from the line of Rohan [Phonetic] from Equirus Securities. Please go ahead.
Unidentified Participant
Good evening, sir. Thanks for the opportunity. Sir, I’m not sure if this was given, but if you could share your loan and deposit growth guidance for the current year? And also on the NIM guidance that you mentioned for ’26, you indicated around 20 to 25 basis point decline, whereas for 2Q, you are guiding for around 10 to 12 bps sequential decline and then improvement in NIMs. So I was not able to correlate these two guidance, sir?
Avinash Prabhu
Yeah. And just the interest rate, as I said in my opening remarks, that Q1 operating environment was more characterized by the sharp reduction in the policy repo rate and now that pass-through is happening. So at this point of time, giving any guidance, will be a little difficult. For this year, we have not given the guidance so far. Loan growth rate is around 6.8%. But within that, ramp growth is in double digits. And directionally, we expect that this double-digit RAM growth rate should be possible over the next few quarters also.
Unidentified Participant
So on NIMs?
Avinash Prabhu
NIM also has said that around 20 to 25 basis point moderation in NIM over March ’25 is expected during the current year.
Unidentified Participant
Sure. And sir, look at the HTM portfolio, that thing has declined by 9% to 10% sequentially. And if I understand it right, bank and after the change that happened on the regulations last year, one can sell up to 5% of HTM. So is that understanding correct? Or if you can explain what is there? And what is the outstanding Ares as of June end?
Avinash Prabhu
Yeah, that is true what you are saying 5%, but this may be also possible because of the OMOs treasury had explained.
Sanjay Rudra
So I think, Steve, you’re right in saying that in STM book, because of the or malls, we have participated, and you have seen that profit was there in our books. So this is because of WeMo, there is a reduction in the HTM book.
Unidentified Participant
Sure. And sir, the outstanding AFS?
Sanjay Rudra
So today, outstanding in maturity is, one moment — INR256 lakhs — INR256 lakhs, INR228 lahks
Unidentified Participant
No, sir, outstanding AFS results
Sanjay Rudra
It would be around INR1 crore to INR500 crores. [Phonetic]
Unidentified Participant
Okay, sure, sir, thanks.
Operator
Thank you. The next question is from the line of Sushil Choksey from Indus Equity Advisors. Please go ahead.
Sushil Choksey
Good evening. Good luck for the year. My first question is to defend the NIM guidance. Besides them, how do you see you will protect the margin? Because I’m sure that low-yielding advances you have said it, which means government accounts like Nava, NASD, CIB, PFC, REC is not of our interest.
Sanjay Rudra
Yeah, Sushil, you see, if you’re looking at it, other than a RAM also, if you’re looking at, we are also having already sanctioned and under disbursement stages projects to the extent of around INR51,000 crores are there, where the projects are going up and the disbursements are happening, which this will be under the MCLR, which will be giving you a better yield for the bank.
Number two is, we also are in the pipeline where around INR20,000 crores are there, which are in the various stages of sanction. So we find that this will be always giving you a stable income. And that’s what I’m saying. Whatever — even if it comes also, this is what we are doing it, we are only substituting that with the lower advances, actually speaking, whenever any opportunity comes, we try to run down the lower-yield advances.
Sushil Choksey
Yeah, Sir, our biggest concern in the balance sheet, where profit margin or credibility of Union Bank and is by strengthening our CASA franchise. And that’s a problem which we are trying to address over the last two, three years post merger.
How do you see this will shape up over the period of two, three years? I’m not saying that this year, CASA will increase or not increase, but if I take our outlook for FY ’27, ’28. How do you see that we’ll strengthen measures that we substantially gain in the market?
Sanjay Rudra
Yeah. As you know, CASA not today or this one — we have been last 1.5 years. We have been working on the CASA upfront with so many new initiatives have been taken. We are connecting to the customers who have reduced their balance we try to recover that. It is on an ongoing basis. There are many initiatives, which has been taken by the bank and are going on. We also have 1,500 relationship managers in various places where around each one of them, we have been mapped with around 400 high-value clients.
So we are trying to see that this CASA, whatever it is going to be the growth for the bank, it should be on a consistent basis and a bank should be able to in the coming days, they will be able to get more CASA because — but problem when we started all these things, the CASA market itself become a little tough and competitive for the bank. But despite that, we are continuing those initiatives and we hope to get many more benefits out of that.
Sushil Choksey
Sir, what is our digital spend likely to be this year? Second is our treasury income and how are you seeing the FX income, which we have shown in the previous 24 months, likely to shape up for this year? And what are we doing to strengthen our HR?
Avinash Prabhu
Yeah. On the digital and tech spend, this year budget is close to INR1,500 crores. Last year, we have utilized around INR1,000 crores. And on the HR side, multiple initiatives are underway in terms of employee reskilling, training, performance management, grooming, all these things are being taken care.
Sushil Choksey
And treasury part?
Avinash Prabhu
See treasury part, particularly Q1 was very different because of the RBI actions and initiatives. That trend, I don’t think we’ll be able to see in the remaining part of the year. So treasury income should moderate significantly going forward.
Sushil Choksey
And the FX impact, what we to make in the arbitrage?
Sanjay Rudra
FX would remain stable around this level.
Sushil Choksey
Do you see that INR1,250 crores, INR1,500 crores of run rate still visible over a period of time? I’m not saying from this quarter, but historically, we use that number.
Avinash Prabhu
Yeah. As of now, I think INR1,500 crores run rate quarterly would be difficult. Let’s see, we expect more from RBI than it’s possible.
Sushil Choksey
Good luck to the team and best for the years to come.
Avinash Prabhu
Thank you. Thank you so much.
Sushil Choksey
Thank you.
Operator
Thank you. Ladies and gentlemen, we will take that as a last question for today. I would now like to hand the conference over to the management for closing comments. Thank you, and over to you, sir.
Sanjay Rudra
Yeah. Thank you very much. We appreciate the feedback from all the investors and analysts in a very evolving scenario. We continue to monitor it and take the corrective actions. We are focused on having a good trade-off between the top line growth and the bottom line. And we’ll continue to ensure that the overall return on assets and return on equity remains as strong as we have done in the past. Thank you very much once again.
Operator
[Operator Closing Remarks]