Public sector lender Union Bank of India posted a net profit of Rs 517 crore in the September quarter as against loss of Rs 994 crore in the same period last year.
The figures for FY20 are aggregated numbers of Andhra Bank and Corporation Bank’s performance for the benefit of like to like comparison. These two banks were merged with Union Bank on April 1, 2020.
The bank's stock closed 1.45 per cent higher to Rs 24.5 per share on BSE.
The net interest income (NII) rose 6.05 per cent to Rs 6,293 crore, while the net interest margin (NIM) dipped to 2.51 per cent in Q2FY21 from 2.68 per cent in the year ago quarter.
The non-interest income, including fees, fell 7.39 per cent to Rs 2,308 crore in the September quarter.
The provisions for NPAs declined from Rs 5,055 crore in Q2FY20 to Rs 3,721 crore in Q2FY21.
Following Supreme Court's interim order, the Bank has not classified any domestic account as non-performing asset (NPA), which was not declared as NPA till August 31, 2020. As a matter of prudence, the Bank has made a provision of Rs 572 crore during the current quarter.
The provision coverage ratio (PCR) improved to 83.16 per cent in Q2FY21, from 74.26 per cent a year ago. PCR was 79.87 per cent in Q1FY21.
The bank’s gross non-performing assets (NPAs) declined to 14.71 per cent in the September quarter, from 15.75 per cent in Q2FY20, and 14.95 per cent in Q1FY21.
Net NPAs declined to 4.13 per cent from 6.40 per cent in Q2FY20. It was 4.97 per cent in Q1FY21.
Had the bank classified borrower accounts as NPA, the gross NPAs would have been 15.37 per cent and net NPAs of 4.76 per cent.
Rajkiran Rai G, the bank's MD and chief executive, said loan restructuring under Covid-19 regulatory package is expected to be 2-3 per cent of the book with a downward bias. The earlier estimate was 5-6 per cent in FY21.
Credit grew 1.87 per cent (on a year-on-year basis) to Rs 6.51 trillion. Total deposits grew 4 per cent to Rs 8.86 trillion in 12 months to September 2020.
The bank’s loan book is expected to grow at 4-6 per cent and deposits at 8-10 per cent in Fy21, Rai added.
The capital adequacy ratio was 12.38 per cent with tier-I of 10.05 per cent in Q2FY21. The bank will raise Rs 2,000 crore of capital through tier-I bonds in the current quarter (Q3FY21). The bank has adequate capital to support growth and would look at issuing equity in Q4FY21 or in FY22, Rai said.