Union Bank of India Q3 Results Review - Operating Performance Healthy; Guidance Maintained: Motilal Oswal

Motilal Oswal Report

Union Bank of India reported 107% YoY growth in profit after tax to Rs 22.4 billion (inline) driven by lower provisions and margin expansion of 6 basis points QoQ to 3.21% in Q3 FY23.

Business growth was healthy fueled by the risk assessment model segment while current account and savings account ratio witnessed a slight moderation during the quarter.

Fresh slippages moderated, which coupled with healthy recoveries and upgrades resulted in an improvement in asset quality ratios. Provision coverage ratio improved to ~75% in Q3 FY23.

Union Bank of India's restructured book declined to 2.38% of loans from 2.60% in Q2FY23. The special mention account book, at 72 bps, was also fairly controlled.

We largely maintain our earnings assumptions and estimate an return on asset/return on equity of 1.0%/16.8%, respectively, by FY25.

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