Union Bank of India’s net profit for the quarter ended March was up 6.6% on year to Rs 5,316 crore, on the back of lower provisions. The bottom line for the public sector bank was pegged at Rs 4,249 crore as per Bloomberg estimates. The growth in the net profit was hindered due to decline in the bank’s net interest income and a rise in slippages.
The net interest income for the reporting quarter fell by 1.1% on year to Rs 9,406 crore, within which there was a sharp fall of over 61% in treasury income.
The net interest margin moderated to 2.64% as against 2.76% a quarter ago. Asheesh Pandey, managing director and chief executive officer at the post earnings press conference said that the net interest margins are expected to improve from hereon as they do not expect any further policy rate cuts. The rise in credit costs to 0.16% also impacted the margins.
Loan Growth
The lender’s global advances were up 9.7% on year to Rs 10.78 lakh crore as on March 31, with the retail, agriculture and MSME (RAM) advances rising 12.6% on year to Rs 5.98 lakh crore. Loans to large corporates also picked up with the segment reporting a growth of 6.39% on year to Rs 4.31 lakh crore. On a sequential basis, the segment saw a growth of 9.3%. The bank has a corporate pipeline of Rs 58,000 crore, out of which Rs 30,000 crore has been sanctioned.
The ratio of the retail to corporate book stood at 55:45 as on March 31, as compared to 57:43 a quarter ago.
On the West Asia crisis, the bank said that while they have not seen any major impact on the affected sectors, there is some slowdown in terms of inward remittances.
Global deposits on the other hand were up merely 3% on year to Rs 13.06 lakh crore as on March-end. Out of which domestic deposits were up 2.72% and the current account, savings account (CASA) deposits were up 7.92% on year.
The CASA ratio improved to 35.21% as on March end from 33.96% a quarter ago. The bank also reported that the growth in CASA along with retail term deposits was 10.6% on year. Pandey said that the bank is comfortable with a global credit-deposit ratio (CD ratio) of 83.27%. For 2026-27, the bank expects loan growth at 13-14% and deposit growth at 8-9%. Cost of funds and cost of deposits declined by 23 basis points (bps) and 8 bps on quarter to 4.37% and 5.23% respectively.
Asset Quality
The provisions and contingences of the bank declined 2.7% on year to Rs 2,640 crore for the reporting quarter. The bank made an additional provision of Rs 700 crore. “This additional provision could be used for the expected-credit loss (ECL) provisioning, or it could be used to tackle with the West Asia crisis,” Pandey said. Provision coverage ratio stood at 95.03% as on March 31.
While the asset quality ratios such as the gross non-performing asset (NPA) ratio and the net NPA ratio improved by 24 bps and 3 bps respectively, the fresh slippages for the reporting quarter inched up. Fresh slippages were up to Rs 2,023 crore for the quarter ended March as against Rs 1,660 crore a quarter ago. The management said that they were mainly from the agriculture book.
On Thursday, the shares of Union Bank of India closed 7.4% lower at Rs 179.71 on NSE.