Union Bank of India reports Rs 1,330-crore net as asset quality improves

Rajkiran Rai G, MD and CEO, said: “There has not been any significant impact on the recovery in April and May, the impact should be in the range of 2-3%. We are expecting a credit growth of 8-10% in FY22.”

Union Bank of India on Monday reported a net profit of Rs 1,330 crore for the March quarter (Q4FY21), compared with a loss of Rs 7,157 crore during the same quarter last year. The lender was back in the black due to a growth in other income and lower provisioning.

Total provisions declined 64% year-on-year (y-o-y) and 16% sequentially to Rs 3,850 crore. The net interest income (NII) declined 9% y-o-y to Rs 5,403 crore.

The non-interest income grew 50% quarter-on-quarter (q-o-q) and 23% y-o-y to Rs 4,551 crore, mainly on account of recovery in the written-off accounts. Overall, the net profit for FY21 stood at Rs 2,906 crore, compared to a net loss of Rs 6,613 crore during FY20.

Rajkiran Rai G, MD and CEO, said: “There has not been any significant impact on the recovery in April and May, the impact should be in the range of 2-3%. We are expecting a credit growth of 8-10% in FY22.”

The net interest margins (NIM) improved 55 basis point (bps) y-o-y and 58 bps sequentially to 2.4%.

The asset quality improved during the quarter under review. The gross non-performing assets (NPAs) ratio improved 154 basis points to 13.74%, compared to reported pro forma gross NPAs of 15.28% in the previous quarter. Similarly, the net NPAs ratio improved 40 basis points to 4.62%, from 5.02% in the December quarter.

“The bank expects a recovery of Rs 13,000 crore during FY22,” Rai said. The lender has also identified accounts worth Rs 7,800 crore for sending to National Asset Reconstruction Company (NARCL). Overall, the banking industry may have identified accounts close to Rs 89,000 crore for sending to NARCL in phase 1, Rai, who is also chairman of the Indian Banks’ Association, said.

Advances declined 2% y-o-y to Rs 6.5 lakh crore. Retail lending portfolio, however, increased 10% y-o-y to Rs 1.25 lakh crore. Advances to agriculture grew 12% y-o-y to Rs 1.2 lakh crore.

Deposits grew 6% y-o-y and 5% q-o-q to Rs 9.23 lakh crore. Current account savings account (CASA) grew 13% y-o-y and 7% q-o-q to Rs 3.35 lakh crore. The capital adequacy ratio (CAR) remained at 12.56%, with CET1 ratio of 9.07% at the end of March 2021.