Union Bank of India Q1 Results Review - Inline; Strong Other Income Offsets High Provisions: Motilal Oswal

Motilal Oswal Report

Union Bank of India reported Q1 FY25 profit after tax of Rs 36.8 billion (13.7% YoY/ 11.1% QoQ, in line) as healthy other income and controlled opex offset higher provisions.

Net interest income grew 6.5% YoY to Rs 94.1 billion (in line). Net interest margins moderated 4 bp QoQ to 3.05% during the quarter.

Loan book grew 14% YoY/0.9% QoQ. Deposits grew 8.5% YoY (flat QoQ). CD ratio, thus, increased by 49 bp QoQ to 71.8%.

Net non-performing asset ratio declined 13 bp QoQ to 0.9%, while slippages moderated 30% QoQ to Rs 23.2 billion.

Union Bank, though, made standard provisions of Rs 12.96 billion for select accounts, which may witness some stress.

We broadly maintain our earnings estimates and estimate return on asset/return on equity of 1.1%/16.1% by FY26. Retain Buy with a target price of Rs 165.

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