Strong Recoveries Double Union Bank Of India Q3 Net To Rs 2,245 Crore

State-run Union Bank of India on Friday reported a two-fold jump in its December quarter net at Rs 2,245 crore, helped by a huge jump in recoveries from loans written-off earlier.

Union Bank of India posted a 20% increase in loans and 13.6% in deposits, its Chief Executive and Managing Director A Manimekhalai said, adding that it will have to moderate on advances in the last quarter due to the divergence between the two.

Its core net interest income grew 20.26% to Rs 8,628 crore on the back of the loan growth and a 0.21% expansion in the net interest margin to 3.21%.

The non-interest income grew 29.58% to Rs 3,271 crore, and was helped majorly by the recoveries from the written-off assets at Rs 1,090 crore, which is a 204% jump from the Rs 358 crore in the year-ago period.

Total income increased to Rs 24,154 crore in the latest December quarter from Rs 19,454 crore in the year-ago period, Union Bank of India said in a regulatory filing.

Manimekhalai said the bank will achieve a 10-12% credit growth in FY23, and also retained other guidance issued by it earlier, including those on slippages and recoveries.

Reverses in the retail, agriculture and small businesses portfolios, coupled with two corporate accounts led to a slippages of Rs 2,500 crore for the quarter, which takes the overall slippages to 9,700 crore for FY23 till now as against a guidance of Rs 13,000 crore.

The gross non-performing assets ratio stood at 7.93% as of Dec. 31, 2022 as against 11.62% in the year-ago period and 8.45% in the preceding September quarter.

On the recoveries front, the overall number achieved in the first nine months of the fiscal stands at Rs 13,609 crore, and the bank will be able to achieve the target of Rs 15,000 crore on this front, Manimekhalai said.

When asked about the deposits side, Manimekhalai said the bank tried bolstering the number with bulk deposit accretion, relying on certificate of deposits and also introduced a new retail deposit product and added that similar efforts will continue even in the future.

The bank is confident of achieving the 3% NIM target for FY23, she added.

Manimekhalai said the bank will be going for a qualified institutional placement of shares to raise up to Rs 3,800 crore in the fourth quarter, and already has the board go-ahead for the same.

Without mentioning how long would the new money suffice, she said this will help bring down government stake in the bank by 4 percentage points to 79% and help it move closer to the 75% target set by capital markets regulator SEBI.

The overall capital adequacy ratio stood at 14.45% as of Dec. 31, 2022, with the CET-1 at 10.71%, which will go up by 0.60% after the capital raise.

The Union Bank scrip closed 0.37% down at Rs 81.30 apiece on the BSE on Friday, as against a 0.39% correction on the benchmark.