Union Bank Q1 profit flat at Rs 228 cr

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Dented by mark-to-market provisioning, Mumbai-based Union Bank of India registered almost a flat net profit of Rs 228 crore for Q1 09, up from Rs 225 crore in Q1 of the previous year, an increase of 1.33%.

MTM depreciation provisioning against its bonds portfolio was Rs 339 crore. The net NPA of the bank came down to 0.15% from 0.78% a year ago. This can be attributed to factors like focus on asset quality, stringent credit review, monetary mechanism and robust recoveries. Similarly, the gross NPA has fallen to 2.08% from 2.78% a year ago. The bank’s cost-to-income ratio reduced to 40.31% from 44.68% in the previous year. Business mix of the bank registered growth of 21.48% (y-o-y) to Rs 1,83,058 crore from Rs 1,50,692 crore during the previous fiscal. The bank aims to reach a business mix of Rs 2,20,000 crore by the end of March 2009, a growth of 22%. Of this, Rs 1,27,500 crore will be deposits (growth of 23% y-o-y) and Rs 92,500 crore advances (growth of 22% y-o-y). Net interest margin was retained at 2.63%, despite reduction of prime lending rates (BPLR) by 50 bps during the entire quarter.

The bank’s capital adequacy at 12.22% is above the minimum required level of 9%. Net worth of the bank rose to Rs 5,844 crore from Rs 4,954 crore a year ago due to plough back of profits.

The bank’s total deposits reached a level of Rs 1,07,248 crore from Rs 86,984 crore a year ago, an increase of 23.30%. Gross advances touched a level of Rs 75,810 crore, registering an increase of 19%.Net interest income increased from Rs 734 crore to Rs 810 crore, a growth of 10.35%. Non-interest income improved to Rs 222, showing a rise of 3.26%. Cost of funds increased to 5.60% from 5.41% in the previous year, while cost of deposits also went up to 6.06% from 5.72% in the previous year. While the yield on advances increased to 10.13% from 10.03% in the previous year, yield on funds decreased to 8.23% from 8.37%.

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