Union Bank of India reported a 32% year-on-year rise in net profit to Rs 1,558 crore for the quarter ended June on the back of a rise in its net interest income (NII) and fall in bad loans.

The bank’s net interest income (NII) rose 8% YoY to Rs 7,582 crore from Rs 7,013 crore a year ago. Net interest margin (NIM) stood at 3% in the April-June quarter from 3.08% a year ago.

Other income grew at just 1% YoY as treasury income fell 64% to Rs 395 crore from Rs 1,100 crore a year ago. 

Net non-performing assets (NPAs) fell to 3.31% from 4.69% last year while recoveries improved to Rs 1,481 crore from Rs 1,147 crore a year ago. The bank is looking to recover Rs 15,000 crore of bad loans in the current financial year.

The aim is to bring the gross bad loan ratio to below 9% by the end of this fiscal, down from 10.22% as of 30 June. This had stood at 13.60% in the April-June quarter of 2021. Similarly, the target is to bring net NPAs to below 3%.

Total slippages fell to Rs 3,600 crore in the June 2022 quarter from Rs 7,049 crore a year ago. The bank expects to limit slippages to Rs 13,000 crore in the current fiscal year.

Provision coverage ratio (PCR) improved to 84.75% from 81.43% a year ago.

The bank expects to maintain PCR at 85% and lower credit costs to 1.70% of loans by the end of the fiscal from 2.02% at the end of June.

Total advances rose nearly 13% YoY to Rs 7.28 lakh crore as of June end. While corporate loans accounted for 46% of the bank’s total loan book, MSME comprised 16% and retail and agriculture-linked advances 19% each.

Deposits grew 9.3% to Rs 9.92 lakh crore as of June end. The low-cost CASA (current account and savings account) ratio stood at 36.19%. The bank is looking to increase it to 37.8% by the end of this fiscal.

The bank’s capital adequacy ratio (CAR) stood at 14.42% in June 2022, up from 13.32% a year ago.

The bank is planning to raise up to Rs 3,500 crore of equity capital through qualified institutional placement (QIP) in the third quarter of FY23, subject to market conditions.