State-run Union Bank of India reported an 8.3% year-on-year rise in net profit to Rs 1,440 crore for the quarter ended March, largely led by the 21% stake sale in IndiaFirst Life Insurance to Bank of Baroda for Rs 766.30 crore.

Of this, Rs 626.97 crore has been included in the net profit of the bank during the quarter.

The bank board has recommended a dividend of Rs 1.90 per equity share of Rs 10 each for FY22.

For the full-fiscal, the bank’s profit was up 80% on a low base to Rs 5,232 crore.

“The stake sale in the insurance company is one of the reasons for the expansion in bottom line. The bank is trying to strengthen its balance sheet by making higher provision to avoid provisioning pressure in the future quarters. Our profits are steady,” Union Bank of India managing director and chief executive officer Rajkiran Rai G told reporters in a press conference, his last before he hangs up his boots on May 31, 2022.

Net interest margin (NIM) improved 37 basis points to 2.75% in the March quarter. Net interest income, the difference in the interest earned and interest expended, was up 25.3% to Rs 6,769 crore.

"Our aim is to maintain NIM at around 3%," Rai said.

Non-interest income, which consists of fee-based income, trading and recovery in written off accounts, declined by 25% over the previous year to Rs 3,243 crore.

The gross non-performing assets (NPAs) reduced to 11.11% from 13.74% a year back. Much of this reduction has come from write-offs. During the financial year, the bank wrote off Rs 19,484 crore of loans while trying to clean up its books. The bank upgraded Rs 7,743 crore of loans and recovered Rs 5,852 crore of loan during the year.

The fresh NPA additions during the year was Rs 22,877 crore. The bank has Rs 60,408 crore of loans in the NCLT.

The net NPA ratio improved to 3.68% against 4.62%. The capital adequacy ratio stood at 14.52%.

The bank’s gross advances grew 9.60% year-on-year to Rs 7,16,408 crore with corporate comprising 46% of the total credit and retail 19%. Gold loans grew the fastest, 18.17% higher than the year-ago period to Rs 33,828 crore.

The bank’s deposits grew 11.75% to Rs 10,32,392 crore.

“We expect our advances to grow by 10-12% and deposits by 10% in FY23. Our gross NPAs should come down to around 9%,” Rai said.

Provisions for NPAs declined 27% over the previous year to Rs 3,460 crore.

The bank has Rs 2,700 crore exposure to the Future Group and Rs 2,492 crore exposure to Srei. The risks are covered by 58% provision and 86% provision respectively, Rai said.