The Union Bank of India on Friday reported a net profit of Rs 516.6 crore for the September quarter of the current financial year against a loss of Rs 994 crore in the corresponding period last year. The bank saw healthy growth in interest income and its asset quality also improved. Its operating profit increased 2% year on year (YoY) and 8.4% quarter on quarter (QoQ) to Rs 4,375 crore. The interest income (NII) increased 6% YoY to Rs 6,293 crore, but remained flat sequentially.
MD and CEO Rajkiran Rai G said the bank expected 2.5%-3% of advances to come up for debt restructuring. “We are expecting Rs 16,000 crore loans to come up for restructuring. It should be 2.5-3% of our advances,” he said. The Reserve Bank of India had earlier allowed restructuring of personal and corporate loans owing to the stress caused by the Covid-19.
The bank’s provisions came down 25% YoY and 14% QoQ to Rs 4,218 crore. Its provision coverage ratio (PCR) improved 884 basis points (bps) YoY to 83.1%.
Its asset quality showed improvement in the quarter under review. Gross non-performing assets (NPAs) ratio improved 24 bps to 14.71%, compared to 14.95% in the previous quarter. Similarly, net NPAs ratio came down 84 bps to 4.13% from 4.97% in the June quarter. “I am expecting net NPA to remain below 5% in the next two quarters,” Rai said.
The lender’s net interest margin (NIM) remained flat at 2.51%, compared to 2.52% in the September quarter last year. NIM declined 17 bps quarter-on-quarter basis, compared to 2.68% in the June quarter. The cost of funds improved 88 bps to 4.82%, compared to 5.70% in the September quarter last year.
Advances grew 1.9% YoY to Rs 6.51 lakh crore. Retail advances grew by 7.8% YoY to Rs 1.17 lakh crore, compared to Rs 1.08 lakh crore in the September quarter last year. “We are expecting 4-6% credit growth at the end of the financial year 2021,” said Rai.
Deposits grew 4% YoY to Rs 8.86 lakh crore in the September quarter. Current account savings account (CASA) deposits grew 12.4% YoY to Rs 3.06 lakh crore.
The capital adequacy ratio of the lender stood at 12.84% at the end of the September quarter, compared to minimum regulatory requirement of 10.875%.
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