Union Bank profit soars 107% despite increase in provisions

Union Bank of India on Friday announced a smart 107% year-on-year increase in its net profit for the three months ended December 31 to Rs 2,245 crore despite an increase in the provisions. The bank’s provisions increased 9% y-o-y to Rs 4,374 crore in Q3FY23. 

The bank’s pre-provisioning operating profit (PPOP) grew 30% y-o-y to Rs 6,619 crore in Q3FY23, led by an increase in non-interest income, which improved 30% to Rs 3,271 crore. The growth in other income was aided by fee income of Rs 1,710 crore and recoveries from written-off accounts to the tune of Rs 1,090 crore.

Also Read: Union Bank to raise Rs 2,200 crore via bond issue

Also Read

FM Nirmala Sitharaman likely to meet CEOs of PSU Banks on Saturday

India seeks data on state-bank bond portfolios amid global banking turmoil: Sources

Citigroup CEO Jane Fraser declares ‘this is not a credit crisis’ after US bank failures

Any dent unlikely in AT-1 bond demand in India

Net interest income (NII) saw a 20% y-o-y growth on account of a strong credit growth of 20%, led by the retail, agriculture and MSME segments. Domestic advances stood at Rs 7.8 trillion while the global loan book was at Rs 8 trillion, higher by 20%.

The bank’s deposits improved by 13.6% y-o-y to Rs 10.6 trillion, with the CASA ratio being 35.30%, lower by 169 bps y-o-y. 

The bank’s net interest margin stood at 3.21% as of December 31, higher by 21 basis points (bps). Going ahead, the bank will be able to maintain its margin at the current guidance of 3%, A Manimekhalai, MD and CEO of the bank, said. 

On the asset quality front, the bank’s gross non-performing asset (NPA) ratio stood at 7.93% as of December 31, lower by 369 bps y-o-y and 52 bps q-o-q. Net NPA ratio stood at 2.14%, down by 195 bps y-o-y and 50 bps sequentially.

Also Read: Union Bank expects to recover Rs 15,000 crore from bad loans this fiscal

The bank’s total recoveries was at around Rs 4,200 crore while fresh slippages were at Rs 2,500 crore. The lender had guided for Rs 15,000-crore recoveries and slippages of Rs 13,000 crore in FY23. The bank’s capital adequacy ratio stood at 14.45% as of December 31, compared with 13.92% a year ago. The bank will go ahead with raising Rs 3,800 crore by issuing shares via qualified institutional placement (QIP) in Q4FY23. The issue will aid the bank improve its capital adequacy ratio by 60 bps, Manimekhalai said.