Union Bank of India (UBI) today reported around 19 per cent jump in net profit at Rs 664.11 crore in the June quarter on higher net core income and lower provisioning for bad loans that declined 42 per cent.
The state-owned bank had posted a net profit of Rs 560.22 crore in the year-ago period.
The bank's provisions and contingencies during the quarter fell sharply by 42 per cent to Rs 392.82 crore as against Rs 681.55 crore in the year-ago period, though its bad loans jumped to 4.27 per cent from 3.50 per cent in the April-June, 2013 quarter.
Provisions came down as the bank had a write-back of Rs 138 crore on investments.
Net interest income, which is the difference between interests paid on deposits and the interest earned from lending, jumped 10.87 per cent, to Rs 2,117 crore in the reporting period, from Rs 1,910 crore.
Asset quality of the bank deteriorated in the first quarter with gross non-performing assets (NPAs) rising to 4.27 per cent as against 3.50 per cent in the year-ago period. Similarly, net NPAs too jumped to 2.46 per cent from 1.96 per cent.
The bank's domestic net interest margins came down marginally to 2.68 per cent from 2.72 per cent, while global net interest margin (NIM) inched down to 2.60 per cent from 2.63 per cent.
UBI Chairman and Managing Director Arun Tiwari told reporters that the lender aims to improve its margins to 2.9 per cent by the end of the current fiscal.
Tiwari said the bank would work towards bringing its gross NPA level to below 4 per cent by March.
Fresh slippages during the quarter stood Rs 1,274 crore, while recoveries and upgrades were Rs 318 crore. It wrote off Rs 288 crore of loans in the quarter and sold Rs 430 crore NPAs to asset reconstruction companies.
The provision coverage ratio stood at 58.92 per cent down from 63.43 per cent in the same period last year.
Tiwari said the bank had made a provision of Rs 27 crore on account of unhedged foreign exposure for the full year in the first quarter itself.
The bank's total business grew 13.21 per cent to Rs 5,36,824 crore from Rs 4,74,200 crore in the year-ago period.
"We are looking at a credit growth of 10.12 per cent and deposit growth of 9 per cent to 10 per cent in FY15," Tiwari said.
Capital adequacy ratio under Basel III stood at 10.41 per cent. Tiwari said the bank is well capitalised and there is no urgency for it to raise funds in the near future. It has also sought a Rs 800-crore fund infusion from the government in the current fiscal, he said.
The UBI counter closed Rs 197.30, up 3 per cent on the BSE today.
