Union Bank Q2 net plunges 73% as bad loans almost double

State-run Union Bank of India today reported a steep plunge in its net profit at Rs 177 crore in the September quarter, down 73 per cent from Rs 658 crore posted a year ago, on account of a massive rise in provisions for bad loans.
Total income increased to Rs 9,347.58 crore for the quarter ended September 30, 2016, from Rs 9,100.90 crore for same quarter year ago, the lender said in a regulatory filing.
Provisions for bad loans jumped to Rs 1,600 crore from Rs 924 crore in the year-ago period, as gross non-performing assets soared to 10.73 per cent from 6.12 per cent while net NPAs doubled to 6.39 per cent from 3.39 per cent, the government lender said.

However, the bank said fresh slippages came down to Rs 3,396 crore in the September quarter from Rs 3,603 crore in the June quarter, while recoveries stood at Rs 251 crore and upgrades at Rs 416 crore.
Domestic net interest margins stood at 2.43 per cent as against 2.42 per cent, while global NIM slipped to 2.30 per cent from 2.34 per cent.
"Going ahead, we expect slippages to come down and recoveries to improve," Chairman and Managing Director Arun Tiwari told reporters.

The slippages in the July-September period came down sequentially from previous quarter, whereas recovery (Rs 350 crore) and upgrades (Rs 141 crore) increased over the previous quarter, he said.

The bank's special mention accounts (SMA-2) rose to Rs 18,781 crore of loans, which constitutes 6.79 per cent of its total loan book.
The bank sold only one non-performing account to asset reconstruction company in the quarter. But Tiwari did not disclose the quantum of the sale.
During the second quarter ended on September 30, the bank restructured nine accounts worth Rs 2,255 crore under strategic debt reconstructing route.
Tiwari said the bank is looking at a deposit growth of 7 per cent and advances growth of 9-10 per cent by next March.
On the NIM guidance, he said the bank will close the year at 2.40 per cent.

The bank's scrip ended 1.97 per cent down at Rs 134.35 on the BSE, whose benchmark index lost 0.57 per cent to settle at 27, 274.15.