Union Bank Q4 net down 23% at Rs 443 cr

Announces dividend of Rs 6 per share; net interest income up 3% at Rs 2,127 cr

Union Bank of India’s net profit in the quarter ended March declined by 23.35 per cent to Rs 443 crore on higher tax outgo.

It had posted a net profit of Rs 578 crore in January-March 2014. Union Bank stock closed at Rs 143, up 3.3 per cent, on the BSE.

The board of directors has recommended a dividend of 60 per cent — that is Rs 6 per share — for 2014-15. The net profit for FY15 rose to Rs 1,781 crore from Rs 1,696 crore in FY14.

Arun Tiwari, chairman and managing director, Union Bank, said the net profits were down because of higher taxation on increase in operating profits in the fourth quarter (Q4).

The operating profit grew to Rs 1,652 crore in Q4 of FY15, from Rs 1,320 crore in Q4 of FY14. It reported tax payment of Rs 198 crore as against tax write-back of Rs 179 crore in Q4 of 2013-14.

The net interest income for the reporting quarter rose marginally (3.5 per cent) at Rs 2,127 crore, from Rs 2,054 crore in Q4 of FY 15.

The net interest margin (NIM) declined from 2.55 per cent to 2.37 per cent. Bank expects to improve NIM between 2.6-2.7 per cent in 2015-16.

The other income comprising fees, sale of investments went up by 47.5 per cent to Rs 1,113 crore in Q4 of FY15 from Rs 774 crore.

The total deposits grew by 6.5 per cent to Rs 3,16,870 crore. The share of low cost deposits — current accounts plus savings accounts — was 29.2 per cent. Bank expects to grow deposits by about seven per cent in FY16.

The loan book expanded by 12.1 per cent to Rs 2, 62,757 crore. The bank has pegged the credit growth in 2015-16 between 11-12 per cent. At the start of year the demand for loans looks remains tepid.

The asset quality remained under pressure on repayment delays. The gross non-performing assets (GNPAs) were up at 4.88 per cent as on March 2015 from 4.08 per cent in March 2014.

However, the GNPAs were down when compared to over 5 per cent level in the third quarter ended December 2014.

The bank’s provisions for non-performing loans in Q4 of FY 15 was Rs 1,009 crore up from Rs 920 crore year ago period. The provision coverage ratio was 59.23 per cent at end of March 2015 as against 59.89 per cent in March 2014.

Bank sold assets worth Rs 368 crore to assert reconstruction companies in Q4.

The restructured loan book was Rs 18,128 crore at end of March 2015.

The capital adequacy ratio under Basel-III was 10.22 per cent with tier-I of 7.50 per cent at the end of March 2015.