United Bank of India net plunges 77%

Drop in profit due to higher provisioning, at Rs 687 crore, against Rs 73 crore in the year-ago quarter

United Bank of India on Thursday reported a net profit of Rs 104.78 crore for the quarter ended March this year, a 77 per cent fall compared to the year-ago period.

P Srinivas, the bank’s managing director and chief executive, said the drop in profit was due to higher provisioning, which stood at Rs 687 crore, against Rs 73 crore in the corresponding quarter last year. As of March 31, the bank’s provision coverage ratio stood at 58.5, against 52.25 in March 2014.

During the March quarter, the bank restructured and upgraded accounts of five companies, worth Rs 780 crore.

For 2014-15, the bank’s non-performing assets (NPAs) fell to Rs 6,553 crore from Rs 7,118 crore in 2013-14. As of March-end, gross NPAs accounted for 9.49 per cent of overall assets, against 10.47 per cent a year earlier. Net NPAs fell to 6.22 per cent of overall assets from 7.18 per cent in the year-ago period.

In March, the Reserve Bank of India had done away with a 15-month credit restriction on the bank, imposed due to high NPAs (the bank was asked not to lend more than Rs 10 crore to a single borrower). Following the lifting of the restriction, the bank’s overall business stood at Rs 1,77,888 crore, with the share of advances at Rs 69,070 crore, up 1.6 per cent year-on-year.

“Now that the restriction on credit growth has been removed, we expect to have total business of about Rs 2 lakh crore by the end of FY16,” said Srinivas.

In the March quarter, the bank’s net interest margin stood at 2.6 per cent, while capital adequacy ratio was 11.42.