Loan recoveries boost Union Bank's net 57%

Recoveries and upgradation were Rs 627 cr during the period compared with Rs 232 cr in the period last year

Strong recovery of bad loans, along with lower slippages, helped Union Bank of India to report a 57 per cent growth in net profit to Rs 554 crore in the quarter ended September compared with Rs 353 crore in the same period last year.

Recoveries and upgradation were Rs 627 crore during the period compared with Rs 232 crore in the period last year. Fresh slippages to non-performing assets were contained at Rs 792 crore compared with Rs 1,821 crore in the second quarter of 2011-12, resulting in lower provisioning for non-performing assets (NPAs).

Chairman and managing director D Sarkar said recovery efforts would continue and he expected to bring down gross NPAs to about three per cent by the end of March, as compared to 3.66 per cent as on end-September. During July-September, the bank restructured loans worth Rs 839 crore.
 

GOOD PERFORMANCE Union Bank of India
(Rscrore)	Sep ‘12	% Chg*
Interest earned	6,109.83	19.56
Other income	545.83	8.96
Total income	6,655.66	18.61
Interest expended	4,259.65	23.50
NII	1,850.18	11.37
Net profit	554.56	57.31
*change over YoY Source: Capitaline; Data compiled by BS Research Bureau

 

Investors took note of the performance and the stock closed at Rs 223.25, about 8.1 per cent higher than its previous close at the Bombay Stock Exchange compared with a one per cent rise of the benchmark index, the Sensex.

Lower provisioning for bad loans also helped its bottom line, which stood at Rs 354 crore compared with Rs 495 crore in the same period of the previous year.

Due to an increase in the cost of funds and following a reduction in the base rate, the benchmark lending rate for all loans, in May, the net interest margin came down to 3.02 per cent compared with 3.2 per cent earlier. “We are aiming to keep our NIM around three per cent for the current financial year,” Sarkar said.

The bank has asked the government for Rs 950 crore of capital infusion this year, to support business growth of 20 per cent.

As on end-September, the capital adequacy ratio was 11.39 per cent and tier-I capital 8.17 per cent.