- Union Bank of India reported a 9.7% rise in net profit to Rs 5,073 crore for December quarter
- Core net interest income grew 0.95% to Rs 9,328 crore with a 2.76% net interest margin
- Deposit growth was 3.36%, lower than banking system average, impacted by shedding bulk deposits
State-run Union Bank of India on Wednesday reported a 9.7% increase in consolidated net profit for the December quarter at Rs 5,073 crore, helped by a sharp fall in provisions.
The bank's core net interest income grew 0.95% to Rs 9,328 crore on the back of a lower than the banking system's 7.13% growth in credit and a 0.15 per cent narrowing in the net interest margin at 2.76%.
Its deposit growth came at 3.36%, also much lower than the banking system's growth.
The non-interest income for the reporting quarter increased 2.82% to Rs 4,541 crore.
The bank's Managing Director and Chief Executive Asheesh Pandey said shedding over Rs 40,000 crore of bulk deposits and Rs 20,000 crore in the inter-bank participation certificates (IBPC) market have tempered the deposit and credit growth numbers, respectively.
The bank is more keen on profitability, rather than just growing the overall business, he said.
He also said the bank has adopted a newer method of computing certain important numbers like cost of deposits and yield on advances in favour of 'efficiencies', but declined to share the net interest margin (NIM) number under the older system of computation.
The fresh slippages declined to Rs 1,820 crore, from Rs 2,199 crore in the year-ago period, and the gross non-performing assets ratio improved to 3.06% from the 3.29% in quarter-ago period.
Its overall provisions declined sharply to Rs 322.23 crore from the Rs 1,599 crore in the year-ago period, becoming one of the major reasons for the profit growth.
Pandey said the provisions were lower because of the high provision coverage ratio at 95 per cent and lower slippages.
He, however, said the bank has found a gap of Rs 4,200 crore between the quantum of provisions it carries and those required under the expected credit loss-based system of setting aside money which kicks-in from April 1 in a phased manner.
He said a total of 500 clients impacted by the US tariffs have approached it for relief under a special dispensation announced by the RBI and Rs 258 crore of disbursements have been made by the bank.
The Union Bank scrip closed 8.03% up at Rs 179.50 apiece on the BSE on Wednesday as against a 0.29% correction on the benchmark.
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