Public sector lender United Bank of India on Thursday reported a net profit of Rs 113.56 crore for the December quarter (Q3), backed by a whopping jump in its operating profit and a substantial fall in provisions for bad loans. The lender had a net loss of Rs1139.25 crore in the year-ago period.
On a sequential basis, the Kolkata-based bank’s net profit for the December quarter this fiscal, however, fell by over 8% quarter-to-quarter from Rs123.88 crore for the September quarter. During Q3, gross non-performing assets (NPAs) in absolute terms fell to Rs11456.79 crore from Rs11,544.19 crore in Q2 this fiscal, according to a stock exchange filing by the lender. Gross NPAs as a percentage of total loans fell 3 basis points (bps) to 15.48% from 15.51% during the previous quarter. During the period under review net NPA ratio, however, rose by 68 bps sequentially at 8.56%.
Managing director and CEO Ashok Kumar Pradhan said during the third quarter, the bank’s overall credit growth was 7% because of de-growth in corporate credit. Retail credit witnessed a 20% growth during the quarter under review.
During Q3 last year, the lender’s net interest income (NII) grew 115.62% y-o-y to Rs819.43 crore, while non-interest income fell 27.95% y-o-y to Rs560.59 crore. Total income during the period under review rose 4.39% y-o-y to Rs2,971.38 crore. NIM stood at 2.98%, up 98 bps over 2% in Q3FY19.
During the December quarter this fiscal, the lender’s operating profit registered a 66.45% y-o-y growth to Rs636.92 crore. Provisions and contingencies fell to Rs507.58 crore for Q3 of FY20 from Rs1,967.20 crore in the corresponding period of FY19. The lender, under the prompt corrective action framework of the Reserve Bank of India, informed its provision for non performing loans declined 52.24% on y-o-y to Rs860.57 crore. Provision coverage ratio improved to 74.19% as on December 31, 2019, against 65.23% as on December 31, 2018.
On the upcoming merger, Pradhan said the harmonisation exercise which includes standardisation of products, process and features of the three merging entities – Punjab National Bank, United Bank of India and Oriental Bank of Commerce, was expected to be complete by the end of this month. “After that the valuation exercise will be complete, and based on that the swap ratio would be determined,” he added.
The proposed amalgamation of the three lenders is most likely to come into effect from April 1, 2020. PNB is the anchor bank for the merger, where the three entities will be merging to become the second largest public sector bank in the country.