Union Bank of India Q4 Results Review - One-Off Opex Dents Earnings; Guides For RoA Of >1%: Motilal Oswal

Motilal Oswal Report

Union Bank of India reported 19% YoY growth in profit after tax at Rs 33 billion (14% miss) in Q4 FY24 as opex increased 13.7% YoY to Rs 76 billion (24% higher than our estimate).

Net interest income grew 14.4% YoY to Rs 94.4 billion (in line). Net interest margins stood broadly stable, with a 1 bp QoQ increase to 3.09%.

Loan book grew 14% YoY/1% QoQ. Deposits grew 9.3% YoY/4.2% QoQ. The credit-deposit ratio, thus, moderated 224 bp QoQ to 71.3%.

Union Bank of India's asset quality ratios improved slightly, with gross/net non-performing asset ratios declining by 7 bp/5 bp YoY to 4.76% /1.03%. However, slippages increased during the quarter to Rs 33 billion from Rs 26.8 billion in Q3 FY24.

We cut our FY25/FY26 EPS estimates by 2.1-2.2% and estimate return on asset/return on equity of 1.1%/16.3% by FY26. Retain Buy with a revised target price of Rs 165.

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