Rajkiran Rai G, MD and CEO, Union Bank of India
Rajkiran Rai G, MD and CEO, Union Bank of India

State-owned Union Bank of India on Friday reported a net profit at Rs 517 crore for the quarter to September on better assets leading to lower credit cost.

The lender had a net loss of Rs 1,194 crore in the year-ago period.

On a sequential basis, the bottomline grew 55.3 percent over the June quarter, the bank said.

However, the numbers are not comparable on an annual basis as Corporation Bank and Andhra Bank were merged with the lender with effect from Arpil 1.

In the latest September quarter, the bank saw massive improvement in asset quality with the net non-performing assets ratio improving by 227 basis points to 4.13 from 6.40 in the year-ago period. Gross NPA ratio improved to 14.71 in the quarter under review from 15.75 in September 2019, leading to lower provisions towards credit losses, the bank management said.

The bottomline was also boosted by not a single penny in taxes as against Rs 546 crore in 2019 September quarter.

Accordingly, the bank made only Rs 3,721 crore in total provisions as against Rs 5,055 crore in the year-ago period. But on a sequential basis, the same jumped from the June quarter when it stood at Rs 2,4521 crore.

Of the total provisions, the money set aside for standard assets came down to a trickle at Rs 49 crore from Rs 720 crore in the same period a year ago and Rs 410 crore in the June quarter.

Net interest income -- which is the interest it earns of every rupee of advances -- in the latest September quarter rose 6.1 per cent to Rs 6,293 crore. Other income stood at Rs 2,308 crore, which included Rs 1,065 crore of treasury income, Rs 932 crore from sale of assets/ investments and Rs 232 crore recovery from written off assets.

The management did not explain the source of this income though.

The provision coverage ratio improved to 83.16 per cent as of September 30, 2020 compared to 74.26 per cent in the year-ago period.

Total business grew 3.1 per cent to Rs 15,37,160 crore in the latest September quarter, with deposits growing 4 per cent to Rs 8,86,098 crore of which the low-cost CASA (Current Account and Savings Account) deposits grew 12.4 per cent to Rs 3,06,665 crore.

Gross advances grew 1.9 per cent Rs 6,51,062 crore of which retail advances grew 7.8 per cent to Rs 1,17,231 crore, taking the share of retail, agri, MSME in total advances up by 161 basis points to 55.7 per cent.

The key profitability gauge of average net interest margin stood at 2.51 per cent in the latest September quarter. Out of the amount, the domestic NIM stood at 2.56 per cent giving a 7.66 per cent yield on advances. Its fund cost or cost of deposit improved to 4.82 per cent as against 5.70 per cent in the year-ago period.

The Union Bank counter closed at Rs 24.50 on the BSE, up 1.45 per cent while the benchmark rallied over 1.3 per cent.

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