UBI results quarter ended June '07

Union Bank of India recorded a quarterly Operating profit of Rs 525 crs for June,'07 as against Rs 388 crs for the quarter ended June,2006 registering growth of 35.31%.

Net Profit has increased from Rs.167 crore to Rs.225 crore registering a growth of 34.73%.

Net interest margin improved from 2.94% in June 06 to 3.11% in June 07 on the back of prudent asset management and cost containment.

Capital Adequacy shored up to 12.66% in June,2007 from 11.25% in June 2006.

Net Worth of the Bank posted a smart rise to Rs 4954 crs in June,2007 from Rs 4249 crs in June,2006 due to plough back of profits and perpetual Bonds of Rs.300 crore

Return on Average Assets improved from 0.82% in June 06 to 0.91% in June 07 indicating more efficient utilization of assets.

Asset Quality: The asset quality recorded a significant improvement, with a steep reduction in Net NPAs from 1.22% in June,2006 to 0.78% in June,2007 and the Gross NPAs from 3.55% to 2.78%.

Gross NPA level reduced from Rs. 1979 crore in June,2006 to Rs.1769 crore in June,2007.

Net NPAs also reduced in absolute terms from Rs. 664 crores in June 06 to Rs. 486 crores in June 07.

Loan Loss provision coverage increased from 66.45% in June,2006 to 72.55% in June 07.

Performance in Brief

Business:

The Bank achieved a new land-mark with the total business mix of the Bank improving by13.89% from Rs.132319 crore as on 30th June 2006 to Rs.150692 crore as on 30th June,2007.

The Bank's total deposits as on 30th June 2007 reached a level of Rs.86984 crore from Rs.76517 crore as on 30th June 2006, an increase of 13.68%. Demand deposits grew by Rs.3201 crore to Rs. 28927 crore as on 30th June 2007 from Rs.25726 crore as on 30th June 2006.

Core deposits grew by Rs 9237crs at a growth rate of 15.74%.

The share of demand deposits to total deposits as at 30th June, 2007 is 33.26%, (previous year 33.62%).

Gross advances of the Bank reached a level of Rs.63708 crore as on 30th June, 2007, registering an increase of 14.17% over June,2006.

The Bank's thrust areas for the year were Corporate, SME, Retail and Agriculture. The Bank acted on a strategy to rebalance its credit portfolio and focus on growing the loan book through high yielding assets.

Credit growth during the quarter has mainly come from SME Rs.2128 crore(31.14%), Agriculture Rs. 2140 crore (24.36%) and from Retail Rs. 1807 crore (15.17%). Retail trade advances grew by 21.52% YoY to Rs 6845 crs from Rs 5633 crs in the previous year.

Capital & Net Worth:

The Bank's Capital Adequacy Ratio (CRAR) has improved to 12.66% as on 30th June 2007 from 11.25% as on 30th June 2006.

The Bank's Net Worth increased by 16.59% and stood at Rs 4954 crore as on 30th June 2007 in comparison to Rs. 4249 crore as on 30th June 2006.

Financial Performance:

The Net Interest Margin of the Bank improved to 3.11% for the quarter ended 30th June 2007 in comparison to 2.94% for the quarter ended 30th June 2006.

The Bank`s Net Interest Income increased from Rs.635 crore to Rs.771 crore, a growth of 21.42 %.

Non-interest income improved from Rs 126 crores in June 2006 to Rs 178 crores in June 2007, a growth of 41.27%.

Operating expenses are contained to Rs.424 crore in June 07 against Rs.373 crore in June 06 inspite of increase in Business.

Asset Quality:

Gross NPAs reduced to Rs 1769 crore as on 30th June, 2007 from Rs.1979 crore as on 30th June, 2006.

The ratio of the Bank's gross NPAs to Gross Advances has improved to 2.78% as on 30th June 2007 in comparison to 3.55% as on 30th June 2006.

Net NPAs reduced to Rs.486 crore as on June 07 from Rs.664 crore as on June 06.

The ratio of Net NPAs to Net Advances has improved to 0.78% as on 30th June 2007 from 1.22% as on 30th June 2006.

The provision cover for NPAs as on 30th June 2007, has improved to 72.55% as compared to 66.45% as on 30th June 2006.

Ratio Analysis:

Increase in Cost of Funds to 5.41% and Cost of deposits to 5.72% for the quarter ended 30th June, 2007 was offset by increase in yield on advances to 10.03% and yield on funds to 8.52% resulting in improvement in Net Interest Margin from 2.94% in June 06 to 3.11% in June 07.

Return on Average Assets improved from 0.82% in June 06 to 0.91% in June 07.

Return on Equity improved from 15.70% in June 06 to 18.18% in June 07.

EPS and Book value showed improvement to Rs 17.83 and Rs 98.07 In June 07 from Rs. 13.21 and Rs. 84.12 respectively in June 06.

Cost to Income Ratio improved from 49.01 in June 06 to 44.68 in June 07.

DEVELOPMENTS DURING THE QUARTER

The Bank opened an ATM at Serethang Nathula in Sikkim situated at 14,300 feet about sea level "� the highest altitude at which any Bank in India has set up an ATM. It is strategically located to facilitate traders and tourists on the Indo- China border.

The Bank was awarded " The Best IT User Award 2006" by NASSCOM under the Banking and Financial Services and Insurance category(BFSI). The award is in recognition for its software package for Clearing House operations at Pune. The entire package was developed in-house.

As part of its initiatives to expand its presence overseas, the Bank opened its first representative office abroad "� at Shanghai, Peoples Republic of China on 18th May 2007.

The Bank has received approval from the Central Bank of United Arab Emirates to open a Representative Office in Abu Dhabi. The Bank is planning to open the representative office by December 2007.

The Bank has approvals from Reserve Bank of India for opening Representative Offices in Beijing and Guandong in Peoples Republic of China and a branch in Hong Kong.

FUTURE PLANS

The Bank aims to reach a business mix of Rs 185000 crore by the end of March 2008, a growth of approx. 24%. Of this, Rs 105000 crore will be deposits (growth of 23%) and Rs 80000 crore will be Advances (growth of 25%).

CASA as a percentage of total deposits to reach 40% by 2010 and 36% by 2008.

Bank will adopt a four pronged strategy for growth. Retail, Agri business, SME and Corporate will continue to be the four growth engines.

The Bank plans to aggressively market technology based products targeting segments such as the youth and mass affluent groups.

125 branches and 500 ATMs will be added in the current year.

By March 2008, 700 additional branches are planned to be covered under the CBS network thus increasing the total number of branches covered under the core banking network to over 1700.

Incremental loan slippages on the existing portfolio would be arrested to below 1% through effective Credit Monitoring system. Gross NPA level is targeted around 2%.

Augmenting fee based income through non-credit related services.