Union Bank of India reported a 32 per cent year-on-year (yoy) increase in first quarter standalone net profit at Rs 1,558 crore growth on the back of growth in net interest income, decline in employee cost and provision write back on standard assets even as its advances grew at a decent clip and asset quality improved.

The bank has drawn up plans to raise about ₹3,500 crore via qualified institutions placement (QIP) in the third quarter (October-December 2022), subject to conducive market conditions, said A Manimekhalai, MD & CEO.

Net interest income (difference between interest earned and interest expended) was up about 8 per cent y-o-y to ₹7,582 crore (₹7,013 crore in the year-ago quarter).

Non-Interest Income, comprising core fee based income, recovery in written-off accounts and others, edged up by 1 per cent y-o-y to ₹2,817 crore (₹2,779 crore). Employees’ cost declined about 8 per cent to ₹2,653 crore (₹2,883 crore).

The public sector bank received a provision write-back on standard advances of ₹1,052 crore. In the year ago quarter, the lender made a provision of ₹1,064 crore on standard advances.

Gross non-performing assets (GNPAs) position improved to 10.22 per cent of gross advances as at June-end 2022 against 11.11 per cent as at March-end 2022. Net NPAs (NNPA) position, too, improved to 3.31 per cent against 3.68 per cent.

During reporting quarter, fresh slippages were lower at ₹3,714 crore (₹5,263 crore in the preceding quarter). Reduction in NPAs was higher at ₹9,331 crore (₹3,872 crore) due to write-offs of ₹6,648 crore, recoveries of ₹1,481 crore and upgradaton of ₹1,202 crore.

RACE focus

Manimekhalai emphasised that the focus of the bank is on “RACE” (RAM — retail, agriculture and MSME loans; Asset quality; Current account, savings account/CASA; and Earnings).

By FY23-end, GNPAs and NNPAs are expected to come down to about 3 per cent and below 9 per cent, respectively. She observed that trading income was down by almost Rs 700 crore in the reporting quarter, resulting in muted growth in non-interest income.

“NIM is about 3 per cent right now. We are sure that with credit growth we will show steady increase in NIM. We will be close to 3.10 per cent (NIM) by the end of the year,” Manimekhalai said.

She expects 12-13 per cent credit growth in FY23. In the reporting quarter, gross advances were up 12.95 per cent yoy and stood at Rs 7,28,635 crore as at June-end 2022.

Corporate loan book grew by 13.52 per cent y-o-y; retail (11.13 per cent); agriculture (14.04 per cent); and MSME (11.26 per cent).

Total deposits were up 9.27 per cent y-o-y and stood at ₹9,92,774 crore as at June-end 2022. Low cost CASA deposits declined to 36.19 per cent of domestic deposits against 36.39 per cent as at June-end 2021. The bank expects to increase CASA to increase to 37.8 per cent by March-end 2024.

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