Union Bank net down 31% to Rs 166.81 cr

BS 200 SCORECARD

Union Bank of India, a mid-sized government-owned bank, today reported 30.60 per cent fall in net profit in the first quarter of 2006-07 from the year-ago period as rising rates caused a sharp dent in the valuation of its investment portfolio.

Interest rates are on the rise across the board. The yield on the benchmark 10-year government bond increased by around 100 basis points during the first quarter of 2006-07 to around 8 per cent. The benchmark yield currently is over 8.3 per cent.

The bank's net profit fell to Rs 166.81 crore in the first quarter ended June 30, 2006 from Rs 240.39 crore a year earlier. Profitability was also hit as the increase in expenditure was marginally higher than the growth in total income, and also because of increase in interest cost.

The Mumbai-based bank's provisions and contingencies, including diminution in value of investments, jumped 144.07 per cent to Rs 157.89 crore for the quarter ended June 30, 2006 from Rs 64.69 crore a year earlier.

Total income in April-June 2006 rose 22.74 per cent to Rs 1,830.72 crore from Rs 1,491.45 crore a year earlier. Interest income on advances was up by 31.87 per cent to Rs 1,116.91 crore from Rs 846.96 crore a year earlier.

Total expenditure increased by 23.36 per cent to Rs 1,404.24 crore in April-June 2006 from Rs 1,138.37 crore a year earlier as interest expenditure jumped 25.23 per cent to Rs 1,031.12 crore from Rs 823.04 crore a year earlier.

Union Bank's deposits rose 21 per cent to Rs 76,517 crore at the end of 2006-07 first quarter from Rs 63,158 crore a year earlier. Advances were up by a robust 34.09 per cent to Rs 63,158 crore from Rs 55,802 crore a year earlier.

The bank's capital adequacy ratio rose dipped to 11.25 per cent from 12 per cent a year ago.