Union Bank Of India Q3 Results: Profit Rises 60% At Rs 3,590 Crore

State-run Union Bank of India on Saturday posted a 60% increase in net profit to Rs 3,590 crore for the December quarter, driven by improved assets quality and lower slippages, but flagged rising stress in its retail book, especially home loans.

On a sequential basis, the bottomline remained flat with Rs 79 crore increase in net profit from the September quarter.

A Manimekhalai, Managing Director & Chief Executive of the lender, told reporters that 11.44% increase in loan sales to Rs 8,95,974 crore, pushed its net interest income up 6.26% year-on-year to Rs 9,168 crore during the quarter under review.

The bottomline was also boosted by 15.4% gain in other income at Rs 3,774 crore, primarily from the markets.

Low-cost Casa deposits increased 5.62% and the total deposits stood at Rs 11,72,455 crore, up 10.09% .

She said the bank could lower its gross bad loan pile by 310 bps to 4.83 per cent to Rs 43,262 crore by selling assets, through the NCLT and other measures apart from writing off Rs 9,000 crore during the quarter.

The bank's net non-performing assets came down 106 bps to 1.08 per cent or Rs 9,351 crore, which is one the best in many years.

However, Manimekhalai flagged the rising stress in the retail book, especially home loans and auto loans but said so far there are only payment delays and not yet became NPAs.

Provision coverage ratio rose to 92.54 from 88.50 year-on-year and from 92.03 sequentially and the credit cost also improved from 1.24% to 0.56%.

Chief Financial Officer Avinash Prabhu said almost all fresh slippages of Rs 7,958 crore came in from its RAM (retail, agri and MSME) book, which increased 13.85%.

The retail book grew 12.60% , agri book grew 17.88% and small business loans clipped at 10.51%.

The bank had in the last quarter said it was expecting at least Rs 12,000 crore of fresh slippages in the current quarter.

On the recovery front, she said cash recovery stood at Rs 2,725 crore, proceeds from the NCLT resolutions at Rs 1,738 crore, other legal recoveries stood at Rs 1,085 crore and upgrades at Rs 1,388 crore.

The bank set aside Rs 3,688 crore in provisions, 15.7% less than the year-ago period and 0.59% lower sequentially.

Manimekhalai said the bank, which has 14% of its overall assets with non-banking lenders, has not seen any dip in loan demand from this segment since the RBI increased risk weighted capital requirement on such exposure by 25% points last November and increased the same on unsecured loans by a similar quantum.

She said the bank does not have a large unsecured book, and personal loans and credit cards combined is around Rs 11,000 crore.