Union Bank’s net rises 18.5%

Aug 02 2014, 01:04 IST
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SummaryThe Union Bank of India on Friday reported a net profit of R664 crore for the three months to June, an 18.5% rise from R560 crore in the same period last year.

The Union Bank of India on Friday reported a net profit of R664 crore for the three months to June, an 18.5% rise from R560 crore in the same period last year.

The rise in profit is due to lower provisioning in the quarter. The bank’s provisioning for bad loans stood at R426 crore at the end of the first quarter, a dip of more than 36% from R670 crore it had provided in the March quarter of the last fiscal.

Net interest margin (NIM) improved on a year-on-year (y-o-y) basis to 2.68%, but saw a sequential decline of 4 bps. Net interest income (NII), the difference between interest earned and interest paid, in the first quarter rose10.93% to R2,118 crore from R1,909 crore in the same quarter last year.

The bank’s non-interest income declined 8.6% to R691 crore from R756 crore in the same period last fiscal.

“With the measures being rolled out by the government, we expect renewed credit demand from the third quarter of this fiscal,” said Arun Tiwari, chairman and managing director of the Union Bank of India. Hesaid they expect credit growth to be around 10-12% and deposit growth at 9-10% this fiscal.

Asset quality deteriorated, with gross NPAs at R10,232 crore, up 44.25% from R7,093 in the same period last year. This led to a 77-bps rise in gross NPA ratio to 4.27%, up from 3.5% in teh first quarter of the last fiscal.

In the June quarter, Union Bank restructured R465 crore of assets. Total advances increased 18.1% y-o-y to R2.39 lakh crore from R2.03 lakh crore in the June quarter of the previous financial year with retail, agriculture and MSMEs accounting for 44.6% of the total advances. Deposits rose 9.5% y-o-y to R2.97 lakh crore as on June 2014 and Casa share in total deposits was 29.1%.

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