State-owned United Bank of India (UBI) clocked a net profit of Rs 105 crore in the first quarter of current financial year against a loss of Rs 389 crore in the previous similar period.
Net interest margin (NIM) of the bank during the first quarter increased to 2.83 per cent as compared to 2.36 per cent in the same period previous fiscal. Net interest income for the quarter rose to Rs 727.47 crore from Rs 545.30 crore year earlier, United Bank of India said in a regulatory filing.
Total income in the first quarter rose to Rs 3,003.13 crore from Rs 2,549.71 crore in the year-ago quarter, it said.
During the quarter, the bank's interest income increased to Rs 2,374.39 crore from Rs 2,155.02 crore while income from other sources jumped to Rs 628.74 crore from Rs 394.69 crore in the year-ago quarter.
UBI managing director and chief executive officer Ashok Kumar Pradhan said that "the worst is behind us".
He told reporters here on Tuesday that profits would be there in the subsequent quarters and the bank would access the capital markets to raise funds either in Q3 or Q4 of the current financial.
"The board approval had already been taken," he said.
Pradhan said that financial parameters like net interest margin and cost-to-income ratio showed improved performance. "The parameters which determine banking performance would continue to improve and we expect to come out of the RBI-imposed prompt corrective action by September this fiscal".
Total business stood at Rs 2.05 lakh crore with deposits at Rs 1.32 lakh crore and advances Rs 73,249 crore.
Pradhan said that bank's target reduction in gross NPA and net NPA by the end of the current fiscal was eight to nine per cent and four to five per cent respectively.
He said in the first quarter, fresh NPAs accrued to the bank was Rs 407 crore as against Rs 547 crore in the same period previous fiscal.
The Kolkata-headquartered bank made a net profit of Rs 95 crore in the fourth quarter of 2018-19 after seven quarters of consecutive losses.
Pradhan said that the bank would reduce its exposure to corporate sector as increase towards the retail, agriculture and MSME.
To a query, he said that it would be difficult for a bank like UBI to reduce marginal cost of funds based lending rate in accordance to downward revision of repo rates.
Pradhan said that the target business volume for the current fiscal year was Rs 2.2 lakh crore.
The bank brought down its bad assets substantially as the gross non-performing assets (NPAs) fell to 15.89 per cent of gross advances as on June 30, 2019, from 22.73 per cent of gross advances as at end of June 2018.
Likewise, the net NPAs were nearly halved to 8.19 per cent from 15.17 per cent.
In value terms, gross NPAs or bad loans stood at Rs 11,639.74 crore as on June 30, 2019, as against Rs 15,169.21 crore a year ago. Net NPAs were at Rs 5,496.09 crore, down from Rs 9,232.61 crore.
Thus, the overall provisioning and contingencies for June quarter of 2019-20 came down to Rs 571.65 crore from Rs 856.30 crore in the same period of 2018-19.
"Provision for non-performing loans in June quarter declined by 40.60 per cent on the year. Stressed assets position showed continuous improvement," United Bank of India said.
The return on assets as of June 30, 2019, was 0.28 per cent against (-) 1.08 per cent at the end of June 2018.
Total business stood at Rs 2.06 lakh crore with deposits at Rs 1.32 lakh crore and advances at Rs 73,249 crore. Deposits grew by about 3 per cent, advances increased by 9.75 per cent and total business improved by 5.29 per cent on a year-on-year basis, the bank said in a release.
Provision Coverage Ratio (PCR) improved to 74.38 per cent as on June 30, 2019, against 56.91 per cent as on June 30, 2018.
The bank said it is focussing on RAM (retail- agriculture-MSME), for which the credit portfolio is expected to reach 60 per cent, in order to achieve sustained growth and profitability.
"Besides, management of stressed assets remains the topmost priority of the bank. Stressed Asset Management Branches have been empowered with a dedicated team of officers in all regions with an exclusive focus on recovery/resolution," it said.
United Bank of India shares closed 1.68 per cent up at Rs 9.68 on BSE.
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