Union Bank Q3 Net drops 13% on higher provisioning, bad loans

State-run Union Bank of India today reported a 13.2 per cent fall in net profit at Rs 302 crore in the third quarter ended December 31 on higher provisioning and deterioration in asset quality.
The bank's profit after tax stood at Rs 348 crore in the same period last year.
"Our provisioning for NPAs increased to Rs 674 crore as against Rs 497 crore in the year-ago quarter. This quarter we have also increased our provision for pension by Rs 30 crore and Rs 26 crore for wage revision, effective November 19," Union Bank Chairman and Managing Director Arun Tiwari told reporters here.

The lender's provisions for pension liability stood at Rs 380 crore and Rs 71 crore for wage revision on December 31.
The gross non-performing assets (NPAs) worsened to 5.08 per cent as against 3.85 per cent in the same period last year. Net NPA ratio stood at 2.95 per cent as compared to 2.26 per cent in the year-ago period.
Fresh slippages in the quarter under review stood at Rs 1,738 crore which mainly came from the sectors affected by the slower growth in the economy, Tiwari said.

"Top two accounts worth Rs 500 crore were from sugar and construction sectors. Slippages in smaller loans that are below Rs 1 crore was Rs 400 crore and the balance was from accounts above Rs 1 crore."

The bank did not sell any bad loan to asset reconstruction companies in the period. Provision coverage ratio stood at 57.25 per cent. It restructured Rs 1,212 crore worth of loans during the quarter.
The bank's recoveries stood at Rs 358 crore while upgradation was Rs 28 crore. It wrote off Rs 218 crore of loans during the period.
The bank's domestic net interest margin - a key barometer of profitability - was 2.57 per cent and global NIM 2.50 per cent. Net interest income for Q3 was up 8 per cent to Rs 2,120 crore from Rs 1,963 crore in the year-ago quarter.

Global business grew 9.4 per cent to Rs 5,61,011 crore from Rs 5,12,870 crore. Domestic deposits increased by 9.4 per cent to Rs 3,07,289 crore and advances grew 8 per cent to Rs 2,27,339 crore.
"For the last four quarters our focus area has been retail, agriculture and micro, small and medium enterprises (MSMEs), which has shown a growth of 26.6 per cent year-on- year," Tiwari said.
Capital adequacy of the Government lender under Basel III was 10.3 per cent on December 31. The bank's shares ended down 5.25 per cent at Rs 238.20 apiece on the BSE.