Union Bank posts Rs 2,503-crore loss in Q4 on provisions

Union Bank’s operating profit rose 53% year-on-year (y-o-y) to Rs 2,653 crore.

Public sector lender Union Bank of India on Tuesday reported a Rs 2,503-crore loss in the March quarter of FY20, as against a loss of Rs 3,369 crore a year ago, as the bank set aside Rs 2,510 crore in provisions for harmonising asset quality classification across the asset books of the two banks it has been amalgamated with.

“The bank, as a prudential measure, has made harmonisation provisioning in its books of accounts for the position as on 31st March, 2020 with regard to impact of divergence in asset classification across Union Bank of India, Andhra Bank and Corporation Bank as per extant IRAC (Income Recognition and Asset Classification) norms. The bank has made an additional harmonisation provision for the quarter and year ended 31st March, 2020 amounting to Rs 2,509.98 crore and the same is disclosed as exceptional items in the financial results,” Union Bank said in its notes to accounts.

Regular provisions fell 39% y-o-y to Rs 3,502 crore. Union Bank’s operating profit rose 53% year-on-year (y-o-y) to Rs 2,653 crore.

The bank reported a total income of Rs 11,307 crore, up 17.5% y-o-y. Net interest income (NII) — the difference between interest earned and interest expended — stood at Rs 2,878 crore, up 10.6% y-o-y. The bank’s domestic net interest margin (NIM) fell 25 basis points (bps) sequentially to 2.3% in Q4FY20.

The bank showed an improvement in terms of asset quality. Gross non-performing assets (NPAs) as a percentage of total advances fell 71 bps on a sequential basis to 14.15% and the net NPA ratio declined 150 bps to 5.49%. In absolute terms, GNPAs stood at Rs 49,085 crore, while net NPAs stood at Rs 17,303 crore in Q4FY20.

The value of slippages during the March quarter stood at Rs 2,490 crore, down from Rs 5,112 crore in the quarter ended December. Recoveries fell to Rs 762 crore in Q4, down from Rs 2,255 crore in Q3.

Gross advances grew 6.6% y-o-y to Rs 3.47 lakh crore at the end of March 2020. The lender’s current and savings account (CASA) ratio fell to 35.6% in Q4FY20 from 36.1% in the same quarter last year. Its total deposits rose 8.4% y-o-y to Rs 4.51 lakh crore at the end of the March quarter.

Union Bank’s shares on the BSE closed at Rs 35.95 on Tuesday, up 9.77% from their previous close. The results were declared after the close of trade.