UBI incurs loss of Rs 489.5 crore in Q2

Provisions quadruple as asset quality deteriorates sharply

United Bank of India (UBI) today said it incurred a loss of Rs 489.5 crore for the quarter ended September 30, 2013 as provisions almost quadrupled on account severe deterioration in asset quality. The state-run lender had earned a profit of Rs 144.6 crore in the corresponding period of last year.

Provisions and contingencies increased to Rs 987.4 crore in July-September period from Rs 258.6 crore a year earlier. This was primarily on account of increase in bad loans. Gross non-performing assets (NPA) increased sequentially by Rs 2,284 crore. The gross bad loan ratio deteriorated sharply, by 364 basis points year-on-year, to 7.52% at the end of September, 2013.

The net non-performing asset ratio also increased to 5.39% at the end of the second quarter from 1.95% in the corresponding period of last year. The bank now has one of the worst non-performing asset ratios in the industry.

Net interest income, or the difference between interest income and interest expense, fell by almost 15% from a year ago to Rs 516.7 crore in July-September period.

Advances increased by 19% from a year earlier to Rs 81,986.6 crore. Deposits were at Rs 117,727.90 crore at the end of the quarter, up 17% year-on-year.

The bank closed the quarter with a capital adequacy ratio of 9.48% as per Basel III norms.

Friday, UBI shares ended at Rs 37.70 on the National Stock Exchange (NSE), down 0.5% from previous close.