Union Bank Q4 results: Profit surges 50% but warns of margin pressure ahead

State-owned Union Bank of India's March quarter net profit jumped 50 per cent to Rs 4,985 crore, and a top official Friday said RBI's rate cuts will keep its net interest margins under pressure going forward.

The bank had earned a net profit of Rs 3,311 crore in the same quarter previous fiscal.

Total income rose to Rs 33,254 crore in the quarter as compared to Rs 31,058 crore in the same period a year ago.

Speaking to reporters here, Managing Director and chief executive A Manimekhalai declined to comment on the controversy surrounding allegations of impropriety in the bulk purchase of a book by former chief economic advisor Krishnamurthy Subramanian by the bank.

 

She also did not answer a specific question on whether the senior management's role is being investigated in the matter.

In results released late last evening, the bank reported that the core net-interest income was almost flat at Rs 9,514 crore in the March quarter, while the 18 per cent growth in non-interest income at Rs 5,559 crore and 16 per cent reduction in provisions at Rs 2,715 crore helped it post the profits.

The loan growth came at 8.62 per cent for FY25 as against a target of 11-13 per cent, while the net interest margin came at 2.91 per cent, within the target band guided earlier.

Manimekhalai declined to share a guidance on the NIMs for the new year, but conceded that the RBI cuts will put pressure on NIMs.

Over 29 per cent of its book is linked to the repo rate and gets repriced automatically with a reduction in the policy rate.

She also declined to share the credit growth which the bank is preparing for in the new fiscal, pointing to challenges in assessing the environment ahead.

The bank will focus on both profitability and prudent growth going ahead, she said, stressing that it wants to grow in a sustainable fashion.

The operating expenditure increased by nearly 20 per cent on quarter to Rs 7,373 crore for the quarter, resulting in the cost to income ratio rising to 48.91 per cent from 45.14 per cent. The bank attributed the same to some human resource-related spends.

It can be noted that as per a report, the bank purchased bulk orders of the ex-CEA's book costing Rs 7.2 crore, which is shrouded in controversy. As per reports, a general manager has been suspended.

Meanwhile, Manimekhalai said the bank has asked its staff in the border states to be cautious and follow all the guidelines issued by the local state level banking committee.

Apart from that, the bank is ensuring that adequate cash is kept at the branches and ATMs so that economic activities are not impacted, the CEO said, adding that it has also upped the cybersecurity defences.

The bank scrip was trading 6.28 per cent up at Rs 122.70 on the BSE as against a 1.05 per cent correction on the benchmark.