Public sector lender Union Bank posted a 57% year-on-year (y-o-y) rise in net profits to Rs 554 crore helped by a fall in the provisions. The shares of the bank rose 8.14% to R223.25 at the close of trade at the BSE on Friday.
Union Bank chairman and managing director D Sarkar said the bank’s focus on reducing slippages and improving recoveries have enabled it to keep its provisions down. The provisions in the quarter decreased by 22% yoy to R487 crore from R623 crore in the same quarter of the previous year.
The net interest margins (NIMs) of the bank fell sequentially by 19 basis points to 3.09%. Sarkar said the fall in NIMs was a result of a dip in Union Bank’s current account savings account (CASA) ratio and the reduction in lending rates.
The asset quality of the bank saw improvement with the net non-performing assets (NPAs) falling by 14 basis points (bps) over the previous quarter to 2.06%. The slippages for the quarter stood at R791 crore as compared to R1,631 crore in the previous quarter. Union Bank also saw upgradations to the tune of R182 crore for the quarter.
Union Bank restructured 179 accounts valued at R839 crore compared with 309 accounts amounting to R1,642 crore in the previous quarter. ?Most of the accounts restructured in the quarter were small sized accounts from a range of sectors including hospitality, infrastructure, steel and chemicals,? said Sarkar.
The advances book of the bank grew above the industry average at 20% yoy in to R1.77 lakh crore. The bank will focus on the retail lending for the rest of the financial year owing to the slowdown in demand for corporate loans, particularly project financing, and asset quality worries in the segment. Sarkar said that he expects Union Bank to post a 17% loan growth in this financial year.
