Union Bank of India posted a 53.81 per cent year-on-year growth in net profit for the third quarter at Rs 303 crore on lower base and robust recovery and upgradation of non-performing assets.
Recovery and upgradation of loans stood at Rs 453 crore compared with Rs 204 crore last year. Provisioning towards restructured accounts was lower at Rs 91 crore against Rs 369 crore of the previous year.
Net interest income grew 9.88 per cent to Rs 1,891 crore as the bank decided to lower lending rates on various category of loans, including retail and small and medium enterprises, but was unable to reduce deposit rates.
The net interest margin (NIM) was 2.95 per cent compared with 3.20 per cent in the same period a year ago. It was 2.99 per cent for the nine-month period ended December 31 compared with 3.16 per cent of last year.
According to D Sarkar, chairman and managing director, the guidance for NIM is three per cent for the financial year. “The margins came under pressure because we reduced lending rates but not deposit rate. In addition, the growth in low cost deposit was also not in line with our expectation,” Sarkar said. The current account savings account (Casa) ratio stood at 31.25 per cent and according to Sarkar the future guidance is to maintain it above 30 per cent.
Non-interest income stood at Rs 640 crore recording a drop of 1.84 per cent compared with the same quarter a year ago.
Non-Performing Assets (NPAs) stood at 3.36 per cent compared with 3.33 per cent a year ago. Net NPAs stood at 1.70 per cent compared with 1.88 per cent a year ago. The bank aims to bring down the gross NPA to three per cent by March-end while plans to increase the provision coverage ratio to 70 per cent from 66.21 per cent as on end December.
Net profit for the nine months ended December 31 improved 35.01 per cent to Rs 1,369 crore compared with the same period a year ago. NII for the nine months ended December 31 grew 11.89 per cent to Rs 5,563 crore.
The bank is in the process of getting capital infusion from the government. “We got the in-principle letter from the government for capital infusion of Rs 1,114 crore,” said Sarkar.
