Union Bank's credit to grow at lower end of guidance band: MD & CEO

RBI's liquidity infusion to reduce fund costs

Public sector lender Union Bank of India (Union Bank) today said its business—credit and deposits—would grow at a pace closer to the lower end of the guidance range for the current financial year (FY25), reflecting a priority for sustainability over aggressive growth.

 

At the start of the financial year, the Mumbai-based lender had guided for 11–13 per cent growth in advances and 9–11 per cent growth in deposits in FY25. Its advances grew by 5.94 per cent year-on-year (Y-o-Y) to Rs 9.5 trillion, while total deposits increased by 3.76 per cent Y-o-Y to Rs 12.16 trillion as of Q3FY25.

 

A Manimekhalai, managing director and chief executive officer, Union Bank, said, “Our strategy prioritises profitability and operational efficiency rather than aggressive growth.”

 

While profitability and asset quality metrics remained in line with expectations, there was moderation in business growth in Q3FY25. This was largely due to the bank’s conscious decision to cut high-cost bulk deposits, which impacted growth numbers.

 

“We now anticipate achieving growth closer to the lower end of the guidance range that we had given. We just keep our fingers crossed and hope we will reach those numbers,” Manimekhalai said while addressing the post-results press conference.

 

There is a pipeline of about Rs 75,000 crore of corporate credit awaiting disbursement and sanctions. “This will help grow the loan book,” she added.

 

Union Bank’s net profit rose 28.24 per cent Y-o-Y to Rs 4,604 crore during the third quarter ended (Q3FY25), driven by healthy growth in non-interest income. Net interest income (NII) was almost flat, showing just a 0.79 per cent Y-o-Y increase to Rs 9,240 crore in Q3FY25. Non-interest income, including fees, commissions, treasury revenues, and recoveries, rose by 17.02 per cent Y-o-Y to Rs 4,417 crore.

 

Referring to recent steps by the Reserve Bank of India (RBI) on liquidity, Manimekhalai said the RBI’s measures would ease liquidity pressure, reduce the cost of funds, and help banks extend more loans.