Union Bank reports Rs 1.3 bn profit in Q1; net interest income up 17.1%
The bank's provision coverage ratio improved for the June quarter to 56.49 per cent, from 51.13 per cent in the same period last year
 "Union Bank reports Rs 1.3 bn profit in Q1; net interest income up 17.1%")
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Public sector lender Union Bank of India has posted a net profit of Rs 1.3 billion after its non performing assets (NPAs) surged and provisioning fell. This marked a rise of 11 per cent in profit against Rs 1.17 billion in the same period last year. “We are pleased to announce a profit after three quarters of losses,” said Rajkiran Rai, MD & CEO, Union Bank of India. He added that the profitability would be sustainable for the coming quarters, unless there are unforeseeable circumstances.
Net interest income for the June quarter grew by 17.1 per cent to Rs 26.26 billion, against Rs 22.42 billion in the same quarter last year. Other income fell by 14.6 per cent to Rs 12.07 billion in the June quarter. Asset quality fell in the quarter, with the gross NPA ratio rising. It stood at 16 per cent, against 15.73 per cent in the March quarter and 12.63 per cent in June 2017. "This would be the highest NPA ratios for the bank. The NPAs will come down as recovery upgrades should be more than the slippages from the second and third quarters," Rai added.
The bank has an exposure of Rs 108.06 billion under the NCLT. It expects a recovery of Rs 35 billion for the full year.
The bank's provision coverage ratio improved for the June quarter to 56.49 per cent, from 51.13 per cent in the same period last year. The provisions for NPA in actual terms fell both sequentially and annually.
The same for June was Rs 18.03 billion, down by 68 per cent from the March quarter and nearly 4 per cent from the year-ago quarter. The bank expects provisioning to rise.
"There is no risk left in the system on the recognition side. If there is any, it is on the provisioning side," added Rai. The bank's advances grew by 5.3 per cent year-on-year to Rs 2931 billion. Rai said this growth was mainly driven by corporate demand, which comprised working capital and term loans. Capital adequacy as on June 2018 stood at 11.45 per cent.
The bank's stock closed at 85.45, down by 4.10 per cent from previous close.
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