Higher bad loan provisions pushed down Union Bank of India's June quarter net profit by 22 per cent to Rs 518.78 crore, but the public lender expressed confidence it will be able to contain dud loans going forward.
Provisioning for bad loans and doubtful assets nearly doubled to Rs 642 crore in the first quarter ended June 30 from Rs 393 crore in the same period last fiscal.
The gross non-performing assets as a percentage of total advances increased 5.53 per cent to Rs 14,144 crore from 4.27 per, or Rs 10,232 crore, while net NPA ratio rose to 3.08 per cent from 2.71 per cent.
On a sequential basis too, both gross and net NPAs rose from 4.96 per cent and 2.71 per cent respectively in the March quarter.
However, Chairman and Managing Director Arun Tiwari today expressed confidence that the bank will contain NPAs at 4.75 per cent this fiscal year, drawing inspiration from the dip in fresh slippages in the first quarter, which stood at Rs 1,508 crore.
He said this is the third successive dip in fresh slippages for UBI. While in the September 2014 quarter fresh stood at Rs 1,968 crore, this declined to to Rs 1,738 crore in the December 2014, which again slipped to Rs 1,547 crore in the March quarter.
Tiwari said delinquency ratio has come down from 2.6 per cent in the last quarter of 2014-15 to 2.4 per cent in the first quarter of 2015-16.
Provision coverage ratio came down to 58.05 per cent from 59.23 per cent in the March quarter and from 58.92 per cent Y-o-Y. The capital adequacy ratio under Basel III stood at 10.14 per cent.
Domestic net interest margin came down to 2.46 per cent from 2.68 per cent a year ago, while global NIM also dropped to 2.39 per cent from 2.60 per cent.
Net interest income rose to Rs 2130 crore from Rs 2117 crore, while non-interest income shot up 13 per cent to Rs 783 crore, driven by 24.4 per cent growth in core fee income.
Savings deposit grew at 10.6 per cent. Share of high cost deposits dipped to 5.4 per cent from 13.5 per cent.
Advances to retail, agriculture and MSMEs sector grew 16.6 per cent, contributing nearly half of domestic loan book.
Global deposits rose to Rs 3,27,264 crore, up 10 per cent from Rs 2,97,420 crore, domestic deposits rose 9.8 per cent from Rs 2,93,137 crore to Rs 3,21,963 crore. Casa grew by 6.9 per cent to Rs 92,612 crore from Rs 86,637 crore.
Despite bad set of numbers the Union Bank counter closed up 1.95 per cent at Rs 157.15 on the BSE.
