Union Bank net up 36%

Public sector lender Union Bank of India on Monday posted a 36 per cent growth in net profit to Rs 601 crore in quarter ended June 30 from Rs 442 crore a year ago on the back of strong growth in interest income.

Net interest income, or the difference between the interest earned on advances and the amount paid for deposits, grew 64.87 per cent to Rs 1,347 crore in the June quarter from Rs 817 crore a year ago.

Non-interest income, however, fell 15.2 per cent to Rs 435 crore, compared to Rs 510 crore in the corresponding quarter last year. UBI improved its net interest margin to 3.03 per cent from 2.32 per cent in the June 2009 quarter despite a decrease in yield on advances to 9.37 per cent from 10.3 per cent in the previous year. The decrease in yield on advances was offset by a fall in cost of funds to 4.95 per cent from 6.02 per cent in the previous year.

The bank’s gross domestic advances grew 29 per cent in the 12 months up to June 30 2010, reaching a total outstanding of Rs 1,20,858 crore.

Current account-savings account deposits grew 27.67 per cent to Rs 55,845 crore as of June 2010 against Rs 43,742 crore in 2009.

The lender reported an increase in gross non-performing assets (NPAs) to Rs 2,735.56 crore from Rs 1873.96 crore in the June 2009 quarter. Gross NPAs as a percentage of gross advances was 2.19 per cent compared to 1.95 per cent a year ago.

Net NPAs as a percentage of net advances was 0.94 per cent as on 30 June compared to 0.72 per cent in the year-ago period.

The bank’s provision coverage ratio as of 30 June was 71.12 per cent compared to 92.67 per cent a year ago.

In a statement, the bank said it is aiming for a growth in deposits to 22 per cent and growth in advances to 25 per cent in the current financial year.

The bank’s scrip fell 2.03 per cent to close the day at Rs 319.3 per share on a day that the benchmark Sensex fell 0.6 per cent.