Union Bank of India more than doubled its net profit in the fiscal first quarter ended June 2023 due to higher core income and a drop in provisions for bad loans.

The state-owned bank posted a 107.67% rise in net profit to Rs 3,236 crore in the April-June quarter compared to Rs 1,558.5 crore a year before.

NII and NIM

Net interest income - the difference between interest earned and interest expended - grew 16.6% to Rs 8,839.7 crore from Rs 7,581.7 crore in the year-ago period.

Non-interest income rose 38.5% year-on-year to Rs Rs 3,903 crore.

Net interest margin expanded 13 basis points to 3.13% in the quarter ended June 2023, from 3% in the year-ago period. 

Asset quality

The bank’s asset quality improved, with gross non-performing assets (NPAs) declining to 7.34% in June 2023 from 10.22% a year ago. In the preceding quarter, gross NPA was 7.53%.

Net NPA improved to 1.58% from 3.31% a year ago. In the preceding quarter, net NPA was at 1.7%.

In absolute terms, gross NPA stood at Rs 60,104 crore, down 19.32% on-year, while net NPA stood at Rs 12,138 crore, down 45.79%.

Provisions for the quarter fell sharply by 38.9% year-on-year to Rs 2,005 crore.

Provision coverage ratio of the bank increased to 90.86% from 84.75% a year ago.

Advances

The bank’s total advances grew 12.33% year-on-year to Rs 8.18 lakh crore. 

The retail segment saw the fastest growth at 16.47% year-on-year, followed by MSME lending at 14.88%, agriculture at 13.37% and large corporate and others at 9.40%. 

Infrastructure lending accounted for 12.9% of the bank's overall advances as of June, with power being the largest category.

The global advances stood at Rs 8.19 lakh crore, as of 30 June.

Deposits

Deposits grew 13.63% year-on-year to Rs 11.28 lakh crore. Low-cost CASA (current account savings account) deposits rose 7.17% year-on-year to Rs 3.85 lakh crore. The share of CASA deposits to overall deposits declined to 34.6% from 36.2%. 

In FY24, Union Bank of India expects advances and deposits to grow by 10-12% and 8-10%, respectively.