Union Bank Of India Q1 Results: Profit More Than Doubles, Provisions Drop

Public sector lender Union Bank of India saw its April-June net profit rise due to higher core income and significantly lower provisions.

The bank's net profit for the quarter stood at Rs 3,236 crore, up 107% year-on-year. Analysts polled by Bloomberg estimated a Rs 2,343 crore net profit for the quarter.

Net interest income, or core income, for the bank rose 16.5% from a year ago and stood at Rs 8,839 crore. Other income, too, rose 38.5% year-on-year to Rs 3,903 crore.

The gross non-performing asset ratio for the bank fell by 19 basis points sequentially to 7.34%. Similarly, net NPA improved to 1.58% as of June 30, compared with 1.7% as of March 31.

Provisions for the quarter fell sharply by 38.9% year-on-year to Rs 2,005 crore.

Business Growth

Union Bank of India's total advances registered a growth of 12.33% year-on-year and stood at Rs 8.18 lakh crore. Deposits, on the other hand, grew by 13.63% year-on-year and stood at Rs 11.28 lakh crore.

Low cost current account and savings account deposits grew by 7.17% year-on-year and stood at Rs 3.85 lakh crore, as of June 30. Union Bank of India's ratio of CASA deposits to overall deposits fell 160 basis point to 34.6%. As per its forward looking guidance, Union Bank of India expects advances and deposits to grow by 10-12% and 8-10%, respectively.

Among advances, the retail segment grew the fastest at 16.47% year-on-year followed by MSME lending at 14.88%, agriculture at 13.37%, and large corporate and others at 9.40%.

Infrastructure lending accounted for 12.9% of the bank's overall advances as of June, with power being the largest category.

Union Bank of India's net interest margin expanded by 13 basis points year-on-year and stood at 3.13%, as of June 30.

Union Bank of India's stock closed 2.35% higher on Thursday, with shares changing hands for Rs 87.05 apiece. The benchmark Nifty Bank index also ended the day higher by 1.09%.