Union Bank of India Q1 standalone net profit zooms to Rs 1,181 crore

Union Bank of India reported over three-fold jump in standalone net profit at Rs 1,181 crore for June quarter 2021-22, helped by higher net interest income and improvement in asset quality.

Union Bank of India on Thursday reported over three-fold jump in standalone net profit at Rs 1,181 crore for June quarter 2021-22, helped by higher net interest income and improvement in asset quality.

The lender had reported a standalone profit after tax of Rs 333 crore in the year-ago period.

The consolidated profit in the quarter jumped over three folds to Rs 1,120.15 crore.

The bank's performance has stabilised and we have seen substantial improvement. After almost three to four quarters, we have seen a normal quarter on the business side.

"Even though we have lost the first two months (of Q1), by June it stabilised. If you look at the numbers, they are very stable except for some heightened NPAs, particularly coming from the MSME side, bank's Managing Director and CEO Rajkiran Rai G told reporters.

Net interest income grew 9.53 per cent to Rs 7,013 crore from Rs 6,403 crore in the year-ago quarter.

Net interest margins (NIM) improved by 30 basis points (bps) to 3.08 per cent as against 2.78 per cent.

Gross non-performing assets (GNPAs) of the lender reduced by 135 bps to 13.60 per cent from 14.95 per cent and net NPA was down 28 bps to 4.69 per cent from 4.97 per cent.

Fresh slippages during the quarter stood at Rs 7,049 crore. Around 45 per cent of slippages came in from the MSME sector as it was mostly affected during COVID wave, Rai said.

He said with restructuring and the Emergency Credit Line Guarantee Scheme (ECLGS) facilities, the stress is likely to reduce going ahead.

Under RBI's Resolution Framework 1.0, the bank restructured Rs 11,965 crore and under Resolution Framework 2.0, total recast during the first quarter was Rs 3,962 crore till June 30.

We expect another Rs 2,000 crore of restructuring in retail and MSME segments put together in the second quarter, Rai said.

During the quarter, recovery and upgradation stood at Rs 4,341 crore. It recovered Rs 250 crore of dues related to Kingfisher Airlines. The bank has a recovery target of Rs 13,000 crore for the full year.

Capital to risky asset ratio (CRAR) improved to 13.32 per cent from 11.62 per cent. Common Equity Tier 1 (CET1) ratio improved to 9.77 per cent from 8.40 per cent.

The bank's deposits grew 1.79 per cent to Rs 9,08,528 crore as of June 30, 2021. Domestic advances rose 0.16 per cent to Rs 6,30,237 crore as at end-June.

It registered 10.61 per cent growth in retail, 12.70 per cent growth in agriculture and 3.33 per cent growth in MSME advances on year-on-year basis.

Rai attributed flat growth in advances to large corporate book not growing. He, however, said the bank has a large sanction pipeline and unutilized working capital limits.

We hope by second and third quarter, the utilisation of limits will go up and expect a credit growth of 8 to 10 per cent by the end of the year, he said.

On the amalgamation of Andhra Bank and Corporation Bank, Rai said the bank expects a synergy benefit of Rs 3,600 crore over a period of three years. The amalgamation came into effect from April 1, 2020.

In 2020-21, the bank got a synergy benefit of Rs 2,400 crore and it expects Rs 900 crore of benefits in this fiscal year, he said.

The bank's scrip closed at Rs 37.95, up 6.90 per cent on BSE.