Union Bank of India posts Rs 1,194 crore Q2 net loss on higher provisions

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Mumbai | Updated: November 15, 2019 1:14:14 AM

The bank said that it made additional provisions to account for a divergence in asset classification identified by the Reserve Bank of India for FY19.

The bank also made a 15% provision against its exposure to Dewan Housing Finance Corporation in the September quarter even though the account slipped only in Q3

Public-sector lender Union Bank of India on Thursday reported a net loss of Rs. 1,194 crore in the September quarter of FY20, owing to a high provisioning burden of Rs. 3,859 crore. The bank said that in the second quarter, it made additional provisions to account for a divergence in asset classification identified by the Reserve Bank of India (RBI) for FY19. It also made a 15% provision against its exposure to Dewan Housing Finance Corporation (DHFL) in the September quarter even though the account slipped only in Q3.

The bank reported a total income of Rs. 10,557 crore, up 12% year-on-year (y-o-y). Net interest income (NII) — the difference between interest earned and interest expended — stood at Rs. 2,906 crore, up 16.5% y-o-y. The bank’s net interest margin (NIM) rose 23 basis points (bps) sequentially to 2.35% in Q2FY20.

The bank turned in a mixed show in terms of asset quality. Gross non-performing assets (NPAs) as a percentage of total advances rose six bps on a sequential basis to 15.24% and the net NPA ratio decreased 25 bps to 6.98%. In absolute terms, GNPAs stood at Rs. 49,850 crore while net NPAs stood at Rs. 20,791 crore in Q2FY20.

The value of slippages during the September quarter stood at Rs. 4,219 crore, up from Rs. 3,090 crore in the quarter ended June. Rajkiran Rai G, MD & CEO, Union Bank of India, said that eight accounts constituted Rs. 1,700 crore of all slippages. “There is one textile company, one non-banking finance company (NBFC) and one engineering company among the accounts that have slipped,” he said.

Gross advances grew 2.7% y-o-y to Rs. 3.27 lakh crore at the end of September 2019, while domestic advances increased 2.5% y-o-y to Rs. 3.09 lakh crore. Rai expects a loan growth of 7-9% in FY20.

The lender’s current and savings account (CASA) ratio fell to 33.8% in Q2FY20 from 34.1% in the same quarter last year. Its total deposits rose 11% y-o-y to Rs. 4.43 lakh crore at the end of the September quarter.

Union Bank’s shares on the BSE closed at Rs. 52.30 on Thursday, down 0.76% from their previous close. The results were declared after the close of trade.

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