Banking News

Union Bank profit rises 32% as provisions slide

Union Bank of India on Tuesday reported a 32% year-on-year increase in its net profit for the first quarter of the current financial year to Rs 1,558 crore as provisions decline. The bank made provisions of Rs 3,889 crore, down 5.6% y-o-y, during the quarter.

The pre-provisioning operating profit (PPOP) improved by 2.7% YoY to Rs 5,448 crore, supported by non-interest income. Non-interest income grew 1.4% YoY to Rs 2,817 crore.

The bank’s net interest income (NII) grew 8.1% to Rs 7,882 crore, led by a strong growth in advances. The bank has given guidance for a credit growth of around 12-13% for both the corporate and RAM sectors, which will also aid margins. The bank’s global advances increased 12.9% to Rs 6.5 trillion.

To fund the credit growth, the bank is planning to raise fresh capital and has approvals to raise Rs 8,000 crore. The bank also plans to raise funds through qualified institutional placement by Q3, depending on market conditions. It will also keep on raising funds through additional tier-1 bonds.

The bank’s net interest margin (NIM) declined 8 bps to 3.0% as on June 30. The targeted loan growth will help the bank maintain the NIM at 3.01% in FY23, A Manimekhalai, MD and CEO, said.

The bank’s total deposits improved by 9.3% to Rs 9.1 trillion, with the current account, savings account (CASA) ratio being 36.19% as of June 30, down 20 bps YoY.

The gross non-performing asset (NPA) ratio stood at 10.22% as on June 30, down 338 bps YoY and 89 bps QoQ. The net NPA ratio stood at 3.31%, down 138 bps YoY and 37 bps QoQ.

Total slippages during the quarter were at Rs 4,200 crore, of which Rs 3,600 crore were fresh slippages while recovery was around Rs 4,400 crore.

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