Union Bank Q1 net down 23% to Rs 464 cr

Union Bank of India’s net profit fell 22.8 per cent for the first quarter ended June to Rs 464 crore, from Rs 501 crore in the year-ago period. Higher provisions for non-performing loans and restructured assets led to a lower net profit.

Sensing a fall in the demand for credit from corporates due to the uncertain economic climate, the bank has scaled down its credit growth target to 19 per cent from the earlier estimate of 22 per cent for FY12. It has also reduced its deposit growth estimate to 17 per cent from 19 per cent for the current financial year, said bank Chairman and Managing Director M V Nair.

The bank’s total income for the reporting quarter rose to Rs 5,399.68 crore from Rs 4,120.6 crore in April-June 2010. Its net interest income for the quarter increased by 18.11 per cent and stood at Rs 1,590 crore.

Its net interest margin improved to 3.10 per cent from 3.03 per cent a year ago, the bank said in a statement.

Its provision for NPAs was Rs 185 crore and Rs 29 crore for the restructured assets portfolio. The provision was in line with the Reserve Bank of India’s revised norms.

Nair said most slippages, loans turning into non-performing assets, were in agriculture, retail and the small- and medium-size enterprises segment. The pain (from higher reporting of NPA) is expected to continue in the second quarter, Nair said. Public sector banks are expected to move borrowers’ accounts to an automated bad loan alert system.

Its deposits rose to Rs 1,98,542 crore from Rs 1,71,080 crore. The share of low cost deposits – current and savings deposits – was 31.51 per cent. Its total advances were up 16.70 per cent to Rs 1,45,567 crore.