Union Bank Q3 net up 49.3%; provisions & contingencies fall sharply

NII rises 8.9% to Rs 7,174 cr; gross NPAs declin to 11.62% in December 2021 from 13.49% a year ago

Union Bank of India’s net profit rose by 49.3 per cent year on year at Rs 1,085 crore for the third quarter ended December 2021 (Q3FY22) on improvement in interest margins and sharp fall in provisions and contingencies.

The net profit was Rs 726 crore in Q3FY21. However, profit declined from Rs 1,526 crore in the second quarter ended September 2021 (Q2FY22).

“The rise in profit is mainly due to increase in net interest income and fall in provisions,” said Nitesh Ranjan, executive director, Union Bank of India.

The bank has reported healthy recovery and upgradation during the first nine month period and is expected to exceed the target for the financial year.

“During the start of the financial year we were targeting Rs 13,000 of recovery and upgrades. After seeing the performance till September, we revised our guidance to Rs 16,000 crore for the full year. Till December, we have Rs 14,000 crore recovery in NPA accounts and we are very hopeful that we will surpass the target of Rs 16,000 crore,” Ranjan told Business Standard.

The Mumbai-based public sector lender's stock closed 0.83 per cent lower at Rs 47.6per share on BSE.

The bank's Net Interest Income (NII) rose by 8.9 per cent to Rs 7,174 crore in Q3FY22 as against Rs 6,590 crore in Q3FY21. Sequentially, NII rose by 5.05 per cent from Rs 6,829 crore in Q2FY22, according to the analyst's presentation.

The net interest margins improved to 3.0 per cent in Q3FY22 from 2.94 per cent in Q3FY21 and 2.95 per cent in Q2FY22.

The non-interest income fell by 15.01 per cent on YoY basis to Rs 2,524 crore in Q3FY22 from Rs 2,970 crore in Q3FY21. Sequentially, it declined by 36.55 per cent from Rs 3,978 crore in the quarter ended September 2021.

“Fall in non-interest income is mainly because of treasury income because interest rates have gone up. Also if you look at the July-September quarter, there was a one-off income… one account was settled through NCLT – a housing finance company – which was not there in the third quarter,” Ranjan said.

Union Bank's provisions and contingencies declined sharply to Rs 2,549 crore in Q3FY22 from Rs 5,210 crore in Q3FY21 and also from Rs 3,723 crore in Q2FY22.

Its gross NPAs declined to 11.62 per cent in December 2021 from 13.49 per cent in the year ago period. Sequentially, they declined from 12.64 per cent in September 2021.

The net NPAs were at 4.09 per cent in December 2021 up from 3.27 per cent a year ago. Sequentially, they declined from 4.61 per cent in September 2021.

The provision coverage ratio stood at 82.8 per cent at end of December 2021 down from 86.18 per cent a year ago. Sequentially, it improved from 81.77 per cent as of September 2021.

Its advances increased by 2.69 per cent year on year (YOY) to Rs 6,69, 531 crore.

“We have seen very good momentum in credit growth, in retail and agriculture and also MSME. Retail, agriculture growth is close to double digits. And after a long time, MSME registered 6.5% year-on-year credit growth during the quarter. Even  sequentially, it was up 5%,” Ranjan said.

Its deposits increased by 6.24 per cent YOY to Rs 9,37,455 crore in December 2021.

The bank's capital adequacy ratio stood at 13.92 per cent in December 2021, up from 12.98 per cent in December 2020.