Union Bank of India reported a 19 per cent increase in net profit at ₹664 crore in the first quarter ended June 30, 2014, as against ₹560 crore in the year-ago period.

The rise in profitability was helped by lower provisions for bad loans, standard loans and restructured loans and write-back in depreciation in investments.

Net interest income in the reporting quarter was up 11 per cent at ₹2,117 crore (₹1,910 crore in the year-ago period). Non-interest income declined 9 per cent to ₹691 crore (₹756 crore).

Arun Tiwari, Chairman and Managing Director, said 60 per cent of the year-on-year growth in loans came from retail, agriculture and micro, small & medium enterprise segments.

Year-on-year, advances increased by 18 per cent to ₹2,33,932 crore, and deposits by 9.5 per cent to ₹2,97,420 crore as at June-endTiwari said Union Bank is focussing on garnering deposits of shorter term and those entailing less replacement cost.

In FY15, the bank will grow its deposits by 9-10 per cent and advances by 11-12 per cent.

Provision towards bad loans, standard loans and restructured loans was at ₹460 crore (₹575 crore).

The bank got a write-back of ₹138 crore on provision made towards depreciation on investment against a provision of ₹41 crore in the year-ago period. Global net interest margin (NIM) was a shade lower at 2.60 per cent (2.63 per cent). The bank expects to end the year with a NIM of 2.90 per cent.

Gross non-performing assets (NPAs) rose to 4.27 per cent (3.50 per cent). With the economic situation gradually improving the bank sees the gross NPAs declining to 4 per cent by March-end 2015.

Since there is not much appetite for credit from the infrastructure sector, Tiwari said there is no urgency in raising resources via long-term bonds.

The Union Bank scrip was trading at ₹197.30 per share, up 5.85 per cent over the previous close on the BSE.

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