Union Bank Of India March Quarter Net Profit Surges 18% On Lower Provisions
For the fiscal 2023-24, Union Bank of India reported a consolidated net profit of Rs 13,797 crore against Rs 8,512 crore in the year-ago period.
![<div class="paragraphs"><p>File photo of Union Bank of India. (Source: Vijay Sartape/NDTV Profit)</p></div>](https://media.assettype.com/bloombergquint%2F2024-02%2F1990fd91-faf1-4397-a286-f2007fae09b9%2FPeople_standing_in_queue_outside_Union_Bank___Source__Vijay_Sartape__BQ_Prime_.jpg?auto=format%2Ccompress&w=200)
State-owned Union Bank of India on Saturday reported an 18.36% growth in its consolidated net profit for the March quarter to Rs 3,328 crore, helped by lower provisions.
For the fiscal 2023-24, the lender reported a consolidated net profit of Rs 13,797 crore against Rs 8,512 crore in the year-ago period.
In the quarter under review, its standalone net profit increased to Rs 3,311 crore from Rs 2,782 crore a year ago.
The core net interest income grew 14.38% to Rs 9,437 crore on an 11.7% growth in advances and widening of net interest margin to 3.10% from 2.97% in the year-ago period.
Its managing director and chief executive A Manimekhalai told reporters that for FY25, it is aiming for a credit growth of 11-13% and deposit growth to be between 9-11% compared to 9.3% in FY24.
It, however, expects a fall in NIMs to 2.8-3%, she said, adding that the targets will be reviewed midway through the year.
The non-interest income declined by over 10% to Rs 4,707 crore, primarily due to halving of recoveries from written off accounts.
For FY25, the bank is targeting the overall recoveries to come at Rs 16,000 crore against over Rs 18,000 crore in FY24.
The overall provisions declined to Rs 3,222 crore from Rs 4,041 crore in the year-ago period.
The fresh slippages increased to Rs 3,202 crore from the Rs 2,687 crore a year ago, but the final stock of gross NPAs was lower because of help coming in on recoveries, upgradation and write-offs.
The bank's gross NPA ratio declined to 4.76% against 7.53% in the year-ago period, and Manimekhalai said it will be targeting to close FY25 with the number under 4%.
The RBI's newly introduced proposals on the project finance front will not have a big impact on the bank's financials, she said, adding that the position will be 'manageable' even if the draft is implemented in the present form.
She said about 28% of the corporate loan book is project finance loans at present, of which 68% is to projects that have been completed. Also, the RBI is proposing for a phased implementation of the provisioning requirements, which will be of help.
The bank has an overall pipeline of over Rs 40,000 crore, which will ensure that the credit growth aims are met, she said, adding that there is demand from sectors like data centres, real estate, steel and renewables.
When asked about the tech side initiatives, Manimekhalai said it is revamping its mobile app at present, and exuded confidence about not being impacted by any challenges on the technology front.
The overall capital adequacy of the bank stood at 16.97%, with the core buffer at 13.65%. Manimekhalai said the bank will not need any new fund infusion unless there is a huge private capex improvement, which ups the demand.
The bank plans to open 250-300 branches in FY25, she said.