State-run Union Bank of India today reported a 34 per cent increase in net profit at Rs 104 crore in the third quarter ended December, helped by higher treasury gains and lower cost of deposits
State-run Union Bank of India today reported a 34 per cent increase in net profit at Rs 104 crore in the third quarter ended December, helped by higher treasury gains and lower cost of deposits. The lender had reported a profit after tax of Rs 78 crore in the same quarter last year. Treasury income rose 95 per cent to Rs 822 crore from Rs 421 crore in the quarter. Flushed with low cost deposits following the Centre’s move to demonetise Rs 500 and Rs 1,000 notes, the bank’s cost of deposits fell to 6.35 per cent from 7.03 per cent.
Domestic net interest margins stood at 2.04 per cent as against 2.31 per cent a year ago. Global NIM was at 2.01 per cent from 2.22 per cent. “We had given a NIM guidance of 2.22-2.25 per cent for this year. In the third quarter, 23 per cent of term loans have been repaid which were high cost and this will help us in meeting our NIM target,” Chairman and Managing Director Arun Tiwari told reporters here. Gross non-performing assets rose to 11.70 per cent from 7.05 per cent, while net NPA stood at 6.95 per cent from 4.07 per cent.
Provision coverage ratio stood at 50.62 per cent. Fresh slippages in the quarter stood at Rs 3294 crore. Recoveries was at Rs 254 crore and the bank upgraded Rs 101 crore of loans in the quarter. The Government lender sold two accounts worth Rs 45 crore to the asset reconstruction companies (ARCs) during the October-December period. “We have been very conservative in selling our assets to ARCs. We have sold two accounts worth Rs 45 crore in the quarter to ARCs,” Tiwari said.
Global business grew by 11.4 per cent to Rs 6,56,819 crore from Rs 5,89,889 crore. Global advances were up by 5.5 per cent to Rs 2,77,012 crore from Rs 2,62,477 crore. Due to strong growth of 13.5 per cent in retail, agriculture and MSME sectors, the bank’s domestic advances increased by 5.9 per cent to Rs 2,49,930 crore. Tiwari said the bank is looking at deposit growth of 9-10 per cent and advances growth of 7-8 per cent in the financial year 2016-17.