Union Bank of India reported a 90% year-on-year jump in net profit to Rs 3,511 crore amid a sharp fall in provisions on the back of lower bad loans. 

The bank set aside Rs 1,691 crore for bad loans during the quarter, nearly 40% lower than what was provided for in the year-ago period.                                                                                                                   

Non-interest income (other income) comprising fees, commissions, treasury income and recoveries increased by 12.8% over the previous year to Rs 3,695 crore.                                                                                                                                          

NII and NIM

Net interest income (NII) expanded 9.89% to Rs 9,126 crore from Rs 8,305 crore in the year-ago period. Sequentially, NII rose by 3.24%.

Net interest margin (NIM) expanded to 3.18% in Q2FY24, up from 3.15% a year ago and 3.13% a quarter ago.

Asset Quality

The lender’s asset quality improved in the September quarter even as it wrote off Rs 6,018 crore of bad loans. The bank also had a cash recovery of Rs 1,722 crore and upgrades of Rs 984 crore. 

The bank’s gross non-performing assets (NPAs) ratio was at 6.38%, down from 8.45% a year ago and 7.34% a quarter ago. 

The net NPA ratio fell to 1.30% from 2.64% a year ago and 1.58% a quarter ago.

The bank had fresh slippages of Rs 2,527 crore during the quarter, led by its agriculture book which threw up Rs 1,004 crore of bad loans. The MSME segment had Rs 827 crore worth of bad loans and retail Rs 506 crore. Accounts worth Rs 984 crore were upgraded.

Provisions

The bank’s provisions for non-performing assets (NPAs) declined to Rs 1,691 crore in Q2, from Rs 2,815 crore in the year-ago period. Sequentially, provisions declined from Rs 1,984 crore in Q1FY24.

The bank's provision coverage ratio (PCR) stood at 92.03% as of 30 September. 

Advances

The bank’s gross advances grew 9.50% to Rs 8.47 lakh crore from Rs 7.73 lakh crore a year ago. The lending to retail, agriculture and MSME (RAM) segments increased by 14.62% to Rs 4.67 lakh crore and constituted 56.92% of domestic advances. While 14.68% growth came from retail, 15.04% was from agriculture and 14.03% from MSME advances. 

Domestic advances grew 9.17% to Rs 8,21,437 crore while the overseas book grew 21.47% to Rs 25,777 crore.

Deposits

Total deposits increased 9.04% year-on-year to Rs 11.37 lakh crore. The share of low-cost CASA (current account and saving account) deposits in this was 34.66% at the end of September 2023, down from 35.64% a year ago.

Capital adequacy ratio was at 16.69%, improving from 14.50% in 30 September 2022. 

The bank has already raised Rs 5,000 crore through equity out of Rs 10,100 crore approved by the board to be raised this financial year.