Union Bank of India posted a 23 per cent decline in net profit, to ₹444 crore for the fourth quarter ended March 31, 2015 (₹579 crore in Q4 FY14), on account of higher provisions for bad loans and higher operating expenses. However, asset quality saw improvement on sequential basis.

Net interest income (difference between interest earned and expended) edged up 3 per cent to ₹2,122 crore, while non-interest income jumped 47.5 per cent to ₹1,143 crore.

Bad loans “The dip in profit was largely due to increase in provisions and higher operating profit that led to higher taxes…We have not seen any demand in the corporate sector,” said Arun Tiwari, Chairman and Managing Director of the bank.

Provisioning largely towards bad loans rose 10 per cent to ₹1,010 crore during the quarter, up from ₹920 crore in the year-ago period.

Gross non-performing assets (NPAs) went up to 4.96 per cent as on March-end 2015 from 4.08 per cent a year ago. However, sequentially, gross NPAs improved from 5.08 per cent.

Similarly, net NPA stood at 2.71 per cent, up from 2.33 per cent in Q4 FY14, and down from 2.95 per cent in Q3 FY15.

For the full year, net profit was up 5 per cent at ₹1,782 crore as against ₹1,696 crore in FY14.

Domestic net interest margin (NIM) declined to 2.46 per cent in Q4 FY15, compared to 2.62 per cent in Q4 FY14.

Target for FY16 Giving guidance for FY16, Tiwari said, “Credit growth will be 10-11 per cent, deposit growth is expected at 7 per cent and NIM could be 2.6-2.7 per cent. Gross NPAs will be curtailed at 4.6-4.75 per cent.”

The bank’s board recommended a dividend of ₹6 a share. Union Bank shares ended at ₹143.55, up 2.35 per cent on BSE.

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