Union Bank Of India Q2 Results: Profit Jumps Due To Fall In Provisions
The net interest income increased 10% to Rs 9,126 crore from Rs 8,305 crore in the year-ago period.
Union Bank of India's profit jumped 90% in the July–September quarter on account of a significant drawdown in provisions.
The public sector lender reported a net profit of Rs 3,511 crore in the second quarter of fiscal 2024 as compared with Rs 1,847 crore over the same period last year, according to an exchange filing on Friday. Analysts polled by Bloomberg pegged its standalone net profit at Rs 3,139 crore.
Sequentially, the bottom line rose 8.5%.
The net interest income increased 10% to Rs 9,126 crore from Rs 8,305 crore in the year-ago period. As on Sept. 30, the net interest margin stood at 3.18%, up 5 basis points from the quarter ended June.
The bank's domestic advances grew 9.2% year-on-year to Rs 8.2 lakh crore during the quarter, propped up by a strong pickup in education and gold loans. However, the absolute share of the two segments in the loan mix was low.
Domestic deposits increased 7.4% to Rs 11.2 lakh crore in the second quarter. As of Sept. 30, the current account and savings account ratio stood at 34.6%.
The bank met the priority sector lending requirements as prescribed by the Reserve Bank of India, under which all banks have to lend 40% of the adjusted net bank credit towards agriculture, micro enterprises and other economically disadvantaged sections.
The share of loans disbursed to women by the bank was exceedingly well above the 5% benchmark set by the RBI under its PSL norms, according to the investor presentation.
The bank's operating expenses rose nearly 12% to Rs 5,600 crore during the reporting period.
Union Bank of India's asset quality improved, with the gross non-performing assets ratio at 6.38% from 7.34% in the previous quarter. The net NPA ratio fell 28 bps to 1.3%, from 1.58% in the first quarter.
While fresh slippages during the quarter amounted to Rs 2,527 crore, accounts worth Rs 984 crore were upgraded. Loans worth Rs 6,018 crore were written off during the period.
Of the total provisions, the amount set aside for bad loans was Rs 1,691 crore during the quarter, nearly 40% lower than what was provided in the same quarter of the previous year.
The bank's provision coverage ratio stood at 92.03% as of Sept. 30. Its capital adequacy ratio was at 16.69%, with CET-1 ratio at 13.05% and tier-II at 2.12%. Out of Rs 10,100 crore approved by the board to be raised this financial year, the bank has already raised Rs 5,000 crore through equity.
Union Bank of India's shares closed 5.4% higher at Rs 99.90 apiece as compared with a 0.4% decline in the benchmark NSE Nifty 50 before the results were announced.