Union Bank of India net up 21%; provisions rise 4% | The Financial Express

Union Bank of India net up 21%; provisions rise 4%

The increase in provisions of Rs 4,077 crore in Q2FY23 came on the back of higher provisioning on standard assets.

Union Bank of India net up 21%; provisions rise 4%
The bank’s deposits grew by 14% YoY in Q2FY23, as it added around Rs 40,000 crore in current account and savings account (CASA) deposits. (Photo source: IE)

Union Bank of India on Thursday posted a 21% year-on-year increase in its net profit for the three months ended September 30, to Rs 1,848 crore, even as provisions rose 4% during the quarter. The increase in provisions of Rs 4,077 crore in Q2FY23 came on the back of higher provisioning on standard assets.

The bank reported pre-provisioning operating profit (PPOP) at Rs 6,577 crore, higher by 8% YoY, despite 18% decline in its non-interest income. The non-interest income fell to Rs 3,276 crore on account of treasury losses and lower recoveries in written-off accounts.

Net interest margin (NIM) expanded by 20 basis points (bps) to 3.15% as of September 30. Net interest income (NII) grew by 22% YoY during Q2FY23 to Rs 8,305 crore, led by robust retail advances growth. The bank’s deposits grew by 14% YoY in Q2FY23, as it added around Rs 40,000 crore in current account and savings account (CASA) deposits. However, the CASA ratio fell 153 bps YoY to 35.63% as of September 30.

Also read| Union Bank Q3 net profit rises 49% to Rs 1,085 crore on lower provisions, NII growth

The bank saw an increase in asset quality as gross non-performing asset (NPA) ratio fell by 419 bps YoY to 8.45% as of September 30, while the net NPA ratio declined by 197 bps to 2.64%. The bank has given a guidance of 9% for gross NPA for FY23 and 3% for net NPA.

Also read| Union Bank of India hikes MCLR by 15 bps

The bank’s fresh slippages stood at Rs 2,913 crore in Q2FY23, while total recoveries stood at Rs 5,685 crore. In FY23, the bank expects slippages at Rs 13,000 crore, of which slippages so far are at Rs 6,700 crore. Similarly, against a guidance of Rs 15,000 crore in recoveries, the bank has made recoveries of Rs 8,500 crore. The bank is planning to raise funds via qualified institutional placement (QIP), latest by Q4FY23. The lender has approval to
raise Rs 3,800 crore through the share issue.

In FY23, the bank plans to raise Rs 8,100 crore, including the QIP, while the rest will come from tier-I bond issue. So far, the bank has raised Rs 1,320 crore through bond issuances.

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First published on: 21-10-2022 at 08:27 IST