Union Bank net up 19% on higher core income

Posts Rs 664 cr profit, bank's net interest income by 11%

State-run lender Union Bank of India reported 18.6 per cent growth in net profit to Rs 664 crore for the quarter ended June boosted by core income as well as slowing growth of stressed assets, resulting in lower provisioning requirement.

Net interest income (NII), which is the difference between interest earned and paid, grew by 10.84 per cent on the back of 18 per cent year-on-year increase in domestic advances, though non-interest income fell to Rs 691 crore from Rs 756 crore reported during the same period of the previous year, mainly due to lower trading profit.

“NII growth was in double digits after four quarters,” said Arun Tiwari, chairman and managing director of Union Bank of India.

Investors took note the performance as its stock surged, closing at  Rs 190.30, up three per cent from its previous close, though benchmark indices slumped on Friday following the global sell-off.

The state-run lenders has restructured half the amount of loans — around Rs 465 crore — during the quarter as compared to the same period last year; hence provision for such accounts was only Rs 7 crore as compared to Rs 50 crore earlier.

Its non-performing assets, however, rose to Rs 10,232 crore as compared to Rs 9,564 crore as on March-end. The provision coverage ratio stood at 58.92 per cent. The bank has seen fresh slippages to NPA category of Rs 1,200 crore, Tiwari said while detailing the earnings.

Sale of stressed asset to the tune of Rs 430 crore also added to the bottomline. “The pipeline of such loans are around Rs 500 crore,” he said.

The net interest margin (NIM) from domestic operations for the period under review improved to 2.68 per cent though cost of funds remain steady but yield on advances improved. NIM for the previous quarter (Q4FY14) was 2.62 per cent.