Union Bank Q4 net loss at Rs 2,583 cr on higher provisions

State-run Union Bank of India today reported a net loss of Rs 2,583 crore for the March quarter due to higher provisions for bad loans.

The bank had posted a net profit of Rs 109 crore in the year-ago period.

For full financial year 2017-18, the lender's net loss stood at Rs 5,247 crore, compared with a profit of Rs 556 crore in 2016-17.

It's managing director and chief executive officer Rajkiran Rai G said during the quarter the bank did not avail any dispensations given by the Reserve Bank of India (RBI).

The apex bank had given a provision to keep only 40 per cent for the accounts referred to the National Company Law Tribunal (NCLT), but the lender did not use it and the actual provision on these accounts was 60 per cent.

The bank also did not take the benefit of spreading the mark-to-market losses in the next three quarters, but instead booked all the losses in March quarter itself.

"On the gratuity part, RBI has given a provision to spread it to three quarters, but we have taken full provision hit in the fourth quarter. These are the reasons loss figure in the quarter looks a bit high," Rai G said.

The lender's total provision rose to Rs 4,473 crore, against Rs 2,025 crore.

Provisions for bad loans stood at Rs 5,639 crore in the quarter, against Rs 1,505 crore in the year-ago quarter.

Its gross non-performing assets (NPAs) stood at 15.73 per cent, compared with 11.17 per cent, while the net NPA was at 8.42 per cent, against 6.57 per cent.

Fresh slippages in the quarter for the bank jumped to Rs 10,043 crore.

"Nearly, 50-60 per cent of the slippages in the quarter was on account of the February 12 RBI guidelines," Rai G said.

About Rs 4,200-crore worth of accounts of the bank were under SDR (strategic debt restructuring) and S4A (scheme for sustainable structuring of stressed assets), which have now become NPAs due to the new RBI circular.

The lender sees concerns on some of the thermal power projects, where it has a total exposure of around Rs 3,000-4,000 crore.

It's global net interest margins (NIMs) stood at 1.90 per cent, against 2.27 per cent; while the domestic NIM stood at 1.99 per cent, compared with 2.40 per cent.

Total deposit of the bank grew 8 per cent to Rs 4,08,502 crore and advances increased by 5.9 per cent to Rs 2,88,336 crore.

The public sector bank is targeting a loan growth of 7-8 per cent in the current financial year.

"We have done all recognition of NPAs and the provision requirement. We have hit the bottom. Hopefully, with some NCLT resolution being visible, we should be in the upwards cycle," Rai G said.

The bank's scrip ended at Rs 87.65, down 4.57 per cent on the BSE, against a 0.21 per cent fall in the benchmark.