Union Bank of India Q3 Results Review - Inline Earnings; Loan Growth Surges: Motilal Oswal

Motilal Oswal Report

Union Bank of India reported a healthy 60% YoY growth in profit after tax at Rs 35.9 billion (in line), driven by controlled provisions, healthy other income, and lower opex.

Net interest income grew 6% YoY to Rs 91.7 billion (3% miss) as net interest margins moderated 10 bp to 3.08%.

Loan book grew strongly by 14% YoY/7.3% QoQ, led by robust growth in the corporate and agri segments. Deposits grew 10% YoY/3% QoQ. The credit-deposit ratio, thus, increased to 73.5% (up 2.9% QoQ).

Union Bank of India's asset quality ratios improved notably, with gross non-performing asset/net non-performing asset ratios declining by 155 bp/22 bp YoY to 4.8% /1.1%. Restructured book declined to 1.6%.

We maintain our FY24/FY25 earnings estimates and expect return on asset/return on equity of 1.1%/17.6% by FY25. Retain 'Buy' with a revised target price of Rs 165.

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