State-run lender Union Bank of India has reported a 66 per cent fall in net profit at Rs 197 crore, compared with Rs 579 crore in the same period of the previous financial year.
The bank made provisioning of Rs 442 crore towards restructured accounts. About 13.5 per cent of these slipped to the non-performing asset (NPA) category. “The fall in profit is mainly due to higher provisioning on restructured accounts. We expect NPAs from recast accounts to be contained within 15 per cent,” said chairman and managing director M V Nair.
While provisioning for NPAs stood at Rs 425 crore, compared with Rs 361 crore in the year-ago period, that for standard advances shot up to Rs 100 crore from Rs 35 crore.
“Some of the loans that were restructured continued to be standard assets. However, provisioning requirement for such standard assets is five times higher at two per cent than normal ones,” said a Union Bank executive. The bank also had to make provisioning for investment depreciation, both on bonds and equity, to the tune of Rs 73 crore in the period, compared with only Rs 6 crore in the year-ago period.
| REPORT CARD (Rs crore) | ||||
| Union Bank of India | Bank of Baroda | |||
| Dec ’11 | % Chg* | Dec ‘11 | % Chg* | |
| Interest earned | 5374.71 | 27.99 | 7671.99 | 35.4 |
| Other income | 592.11 | 19.96 | 1149.33 | 69.98 |
| Total income | 5966.82 | 27.14 | 8821.32 | 39.09 |
| Interest expended | 3593.85 | 39.1 | 5016.48 | 48.69 |
| NII | 1780.86 | 10.21 | 2655.51 | 15.85 |
| Net profit | 197 | -66.01 | 1289.85 | 20.67 |
| *Y-o-Y change Source : Capitaline; Data compiled by BS Research Bureau | ||||
Another government-owned lender, Bank of Baroda, posted a 20.7 per cent rise in net profit to Rs 1,290 crore for the quarter ended December 31. Robust growth in net interest income, fees and revenue from treasury aided the bank’s earnings. The bank had reported a net profit of Rs 1,069 crore in the October-December period of 2010.
Bank of Baroda restructured loans worth Rs 3,224 crore in the April-December period. In the third quarter, it recast loans worth Rs 2,116 crore. The restructured loans book stood at Rs 9,945 crore, and corporate loans accounted for 65 per cent of the loan book. Accounts from the infrastructure, iron & steel, engineering and real estate segments have a major share in the restructured book.
Slippages in the quarter stood at Rs 500 crore. Its provision for NPAs rose 175.2 per cent to Rs 837 crore. said the bank has set aside a higher amount to keep the loan loss coverage ratio at about 80 per cent.
Chairman and managing director M D Mallya said net interest income rose 15.8 per cent to Rs 2,655.5 crore, against Rs 2,292 crore in same quarter of the previous financial year. Other income, including commissions, fees and revenue from treasury, at Rs 1,149 crore, rose 70 per cent. Treasury income grew 178 per cent to Rs 400 crore.
Both Union Bank of India and Bank of Baroda have exposure to the troubled telecom player, the GTL Group, loans towards which were restructured in the period.
