Union Bank of India has reported a 60% leap in net profit to Rs 3,590 crore for the December quarter, driven by improved assets quality and lower slippages.

Net interest income

An 11.44% rise in the loan book pushed the bank’s net interest income (NII) up 6.26% year-on-year to Rs 9,168 crore in the fiscal third quarter ended December.

The non-interest income of the bank increased 15.29% year-on-year to Rs 3,774 crore. 

Net interest margin

Net interest margin (NIM) stood at 3.08%, down by 13 basis points year-on-year and 10 basis points on quarter basis.

Loan growth

The state-owned bank’s loan book stood at Rs 8,95,974 crore as of 31 December 2023. While the retail book grew 12.60% year-on-year, agri saw a rise of 17.88% and small business loans logged a growth of 10.51%. 

Union Bank of India managing director and CEO A Manimekhalai flagged the rising stress in the retail book but clarified that so far there are only payment delays and have not yet become bad loans. The stress has particularly come from home and auto loans.

The RAM (retail, agri and MSME) segment as a whole increased by 13.85% year-on-year. RAM advances as a percent of domestic loans stood at 56.28%.

Union Bank of India chief financial officer Avinash Prabhu said almost all fresh slippages of Rs 7,958 crore came in from its RAM book.

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

Deposits

Deposits grew 10.09% year-on-year to Rs 11.72 lakh crore. Low-cost CASA (current account savings account) grew 5.62%.

The lender saw a 10.67% year-on-year growth in business to Rs 20.68 lakh crore in the December quarter.

Provisions

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

Out of the total provisions, Rs 12.74 crore was made towards investment in Alternative Investment Funds (AIFs).

Provision coverage ratio rose to 92.54% from 88.50% a year ago and 92.03% a quarter ago.

Recovery

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

Bad loans

The bank's gross non-performing asset (NPA) stood at 4.83% as of 31 December 2023, down from 6.38% a quarter ago and 7.93% a year ago.

The net NPA ratio fell to 1.08% versus 1.30% a quarter ago and 2.14% a year ago.

In absolute terms, the gross NPA of the bank stood at Rs 43,261.88 crore in the December quarter, compared to Rs 54,012.76 crore a quarter ago and Rs 63,770.16 crore a year ago.

Net NPA cooled to Rs 9,351.23 crore from Rs 10,471.01 crore a quarter ago and Rs 16,195.11 crore a year ago.

NBFCs

Manimekhalai said non-banking financial companies (NBFCs) account for 14% of the total loan book and this share has not decreased.

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