Profit growth to fall in Q4: Union Bank

The Union Bank of India has said that its net profit for the fourth quarter will not be as buoyant as the previous three quarters of the current financial year ending March 2009. Its Chairman and Managing Director M V Nair, after launching an advanced call centre today, said that the bank had made 45 per cent net profit for the first three quarters .

“But we do not expect 45 per cent in this quarter,” he said. Referring to the bank’s prospects for the next financial year (2009-10), Nair said it will be a challenging year (in the backdrop of the slowdown in economic growth).

“Trade and commerce has been impacted by uncertainty. The bank would wait for the Reserve Bank of India’s projection of credit and deposit growth in the banking system for 2009-10. Whatever the RBI’s projection is, we will look to (target) 5-7 per cent higher for both credit and deposit growth (in 2009-10),” he said. The RBI will make known its credit and deposit growth outlook on April 21 when it announces its policy statement for 2009-10.

Nair sees the bank’s credit growth at 25 per cent in the current financial year and deposit growth at 30 per cent. RBI has projected a 24 per cent credit growth and 19 per cent deposit growth for banks in 2008-09. The central bank had raised the growth targets in its third quarter review of monetary policy. “Union Bank also expects its net interest margin at 2.8 per cent by March-end and aims to maintain it at a similar level in the next financial year as well,” Nair said.

The Mumbai-based public sector bank will restructure about 1,00,000 loan accounts in this financial year, and most of these accounts are of small and medium enterprises. The restructured accounts would also include housing loans to borrowers facing difficulties in making EMI payments. “That (restructuring) will be around 3-4 per cent of the balance sheet,” Nair said, adding that the bank is not in a big hurry to raise capital in the next financial year as its capital adequacy ratio is comfortable at 13 per cent.