Union Bank of India on Monday reported a 275% year-on-year increase in its profit to Rs 575 crore for the December quarter because of recoveries worth Rs 2,255 crore from three large non-performing accounts. The accounts were: Essar Steel, Ruchi Soya and Prayagraj Power. The bank reported a total income of Rs 10,741 crore, up 12% y-o-y. Net interest income (NII) stood at Rs 3,134 crore, up 26% y-o-y. The domestic net interest margin (NIM) rose 11 basis points (bps) sequentially to 2.55% in Q3FY20.
The bank turned in a mixed show in terms of the asset quality. Gross non-performing assets (NPAs) as a percentage of total advances fell 38 bps on a sequential basis to 14.86% and the net NPA ratio marginally rose to 6.99%. In absolute terms, GNPAs stood at Rs 49,924 crore while net NPAs stood at Rs 21,510 crore in Q3FY20. The value of slippages during the December quarter stood at Rs 5,112 crore, up from Rs 4,219 crore for the quarter ended September.
Rajkiran Rai G, MD & CEO, said one large housing finance company, understood to be Dewan Housing Finance Corporation (DHFL), accounted for much of the fresh bad loans. “Actually, our total recoveries for the nine months has been Rs 4,910 crore (recoveries and upgrades). We are expecting another Rs 3,000 crore of recoveries in this quarter, both from NCLT (National Company Law Tribunal) and non-NCLT (accounts),” he said.