Union Bank posts 9.7% increase in Q3 profit

New Delhi: State-run Union Bank of India (UBI) on Wednesday reported a 9.7 percent increase in consolidated net profit for the December quarter at Rs 5,073 crore, helped by a sharp fall in provisions.

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The bank's core net interest income grew 0.95 percent to Rs 9,328 crore on the back of a lower than the banking system's 7.13 percent growth in credit and a 0.15 percent narrowing in the net interest margin at 2.76 percent.

Its deposit growth came at 3.36 percent, also much lower than the banking system's growth.

The non-interest income for the reporting quarter increased 2.82 percent to Rs 4,541 crore.

The bank's Managing Director and Chief Executive Asheesh Pandey said shedding over Rs 40,000 crore of bulk deposits and Rs 20,000 crore in the inter-bank participation certificates (IBPC) market have tempered the deposit and credit growth numbers, respectively.

The bank is more keen on profitability, rather than just growing the overall business, he said.

He also said the bank has adopted a newer method of computing certain important numbers like cost of deposits and yield on advances in favour of "efficiencies", but declined to share the net interest margin (NIM) number under the older system of computation.

The fresh slippages declined to Rs 1,820 crore, from Rs 2,199 crore in the year-ago period, and the gross non-performing assets ratio improved to 3.06 percent from the 3.29 percent in quarter-ago period.

Its overall provisions declined sharply to Rs 322.23 crore from the Rs 1,599 crore in the year-ago period, becoming one of the major reasons for the profit growth.

Pandey said the provisions were lower because of the high provision coverage ratio at 95 percent and lower slippages.

He, however, said the bank has found a gap of Rs 4,200 crore between the quantum of provisions it carries and those required under the expected credit loss-based system of setting aside money which kicks-in from April 1 in a phased manner.

He said a total of 500 clients impacted by the US tariffs have approached it for relief under a special dispensation announced by the RBI and Rs 258 crore of disbursements have been made by the bank.

The Union Bank scrip closed 8.03 percent up at Rs 179.50 apiece on the BSE on Wednesday as against a 0.29 percent correction on the benchmark.

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