State-run Union Bank of India today said its net profit rose 78 per cent to Rs 371 crore in the three months to September, driven by lower provisioning and income tax write-back.
The bank had reported a net profit of Rs 208.12 crore in the July-September quarter of 2013-14 fiscal.
"Increase in profit was on account of income tax write-back worth Rs 140 crore and lower provisioning," Union Bank Chairman and Managing Director Arun Tiwari told reporters.
Provisions during the second quarter under review stood at Rs 785.41 crore as against Rs 936.75 crore in the same period last year. Domestic net interest margin declined marginally to 2.60 per cent from 2.62 percent, while global NIM stood at 2.53 per cent, a notch down from 2.54 per cent.
"The marginal decline in NIM is due to proportionately higher increase of cost of funds compared to the gains in the yield. The cost of funds was impacted by increase in deposit cost whereas yield of fund was impacted by fall in investment yields," the bank's Chief Financial Officer Mayank Mehta said.
Gross NPA in Q2 stood at 4.69 per cent as against 3.64 per cent whereas net NPAs was 2.71 per cent vs 2.15 per cent.
"There were two large accounts, one from cement and other from textile sector, aggregating about Rs 700 crore that slipped during the quarter," Tiwari said, adding the gross NPA is likely to be at 4 per cent by March-end.
Total slippages during Q2 stood at Rs 1,968 crore.
The city-based lender sold Rs 16 crore of non-performing assets to an asset reconstruction company in Q2. It restructured Rs 738 crore of standard assets and Rs 193 crore of NPAs. It has a restructuring pipeline of Rs 1,600 crore.
Commenting on the results, Angel Broking Vice- President (Research) Vaibhav Agarwal said, "The bank reported a mixed set of numbers with PAT growing by 78.4 per cent, aided by a 16.2 per cent de-growth in provisions. However, asset quality continues to deteriorate."
Provision coverage ratio was at 57.97 per cent as on September 30 as against 60.43 per cent a year ago. Capital adequacy ratio under Basel III was 10.30 per cent.
Global business grew by 7.1 per cent to Rs 5,44,576 crore in Q2 from Rs 5,08,713 crore. Domestic deposit increased by 4.1 per cent to Rs 2,95,361 crore from Rs 2,83,674 crore.
CASA deposits grew by 6.3 per cent to Rs 86,189 crore from Rs 81,075 crore a year ago. Domestic advances rose 9.4 per cent from Rs 2,06,690 crore to Rs 2,26,011 crore.
Tiwari said the bank is aiming at a deposit growth of 9-10 per cent and credit expansion of 11-12 per cent in FY15.
The bank's scrip ended 0.58 per cent up at Rs 225.50 on the BSE.
