Public sector lender United Bank of India on Tuesday reported a net profit of R41.78 crore for the quarter ended December 31, 2014, against a net loss of R1,238.08 crore in the year-ago period, on the back of a sharp reduction in provisions and growth in other income.
During the period under review, the bank’s net interest income (NII), the difference between interest earned and interest expended, saw a 18.18% y-o-y decline to R622.47 crore as the interest income during the October-December quarter also registered a fall due to restriction imposed on credit deployment and muted credit offtake.
Interest income posted a more than 9% y-o-y fall to R2,509 crore from R2,765 crore in the corresponding period last fiscal. United Bank’s other income, however, grew over 92% y-o-y at R426.06 crore and that helped the bank post more than a 10% y-o-y growth in its operating profit to R602.77 crore.
Provisions during the December quarter dropped sharply by 72% year-on-year to R520.42 crore from R1,857.83 crore in the year-ago period on the back of a decline in provision for bad loans.
The bank’s managing director and chief executive officer, P Srinivas, said during the period under review, provisions for bad loans stood at R355 crore against R1,078 crore in the same period last fiscal.
During October-December period, gross NPAs in absolute terms fell more than 8% to R7,809.38 crore from R8,545.50 crore in the corresponding period of FY14.
Srinivas said during the third quarter, total recovery stood at about R880 crore, while fresh slippages were at R1600 crore. The bank’s restructured pipeline would not be more than R500-600 crore, he said.
The bank’s gross NPAs as percentage of gross advances in the quarter ended December, 2014, rose 121 bps year-on-year to 12.03%, while its net NPA ratio also grew 106 bps y-o-y to 8.50% in the quarter gone by.