Union Bank April-June Profit Up 11.9% On Year As Provisions Drop; NIM Contracts

Union Bank Of India posted an 11.9% rise in net profit for the April-June quarter to ₹41.16 million, driven by a sharp fall in provisions and contingencies. However, profit declined 17.4% sequentially.

Provisions and contingencies fell 40% on year to ₹16.65 million, the biggest decline in five quarters. Provisions on non-performing assets were down 30.2% on year at ₹11.53 million. The lender’s provision coverage ratio stood at 94.65% as of June 30, compared to 93.49% a year ago.

Net interest margin narrowed to 2.76% in the June quarter, down 29 basis points on year and 11 bps on quarter, mainly due to the repo rate cut by 75 bps during the quarter.

Gross non-performing asset ratio improved to 3.52% as of June 30 from 3.60% at the end of March and 4.54% a year ago. Net NPA ratio fell slightly to 0.62% from 0.63% in the previous quarter and 0.90% a year earlier.

Total expenses during the quarter rose 7.7% on year to ₹248.73 million. Of this, interest expenses rose 7.3% to ₹181.83 million.
Total income increased 2.9% on year to ₹317.81 million, supported by a 3.5% rise in interest income to ₹272.96 million. Other income declined 0.5% to ₹44.86 million.

Net interest income fell 3.2% on year to ₹91.13 million.

Gross advances rose 6.8% on year to ₹9.745 trillion as of Jun. 30 but were down 0.9% sequentially. Retail loans grew 25.6% on year to ₹2.29 trillion, while MSME advances rose 17.7% to ₹1.44 trillion. Agriculture loans fell 9.2% to ₹1.72 trillion.

Global deposits stood at ₹12.40 trillion, up 3.6% on year. CASA deposits grew 0.9% to ₹4.03 trillion. The CASA ratio slipped to 32.52% from 33.52% in the previous quarter and 33.40% a year ago.

Credit cost fell 26 bps on year and 22 bps on quarter to 0.47%. The cost of deposits was 5.53%, up from 5.36% a year ago, but down from 5.61% in the March quarter.