Union Bank of India’s net profit declined 37% year on year (YoY) for the duration of the December quarter (Q3FY21) as provisions jumped 3-fold. Provisions elevated 189% YoY and 25% quarter on quarter (QoQ) to Rs 5, 256 crore. Despite this, the bank reported a 40% rise in net profit sequentially. Though its operating profit declined 9% YoY, it grew 12% QoQ to Rs 5,311 crore. Net interest earnings (NII) elevated 5% YoY and QoQ to Rs 6,590 crore.
The bank’s provision coverage ratio (PCR) enhanced 300 basis points (bps) sequentially to 86%. The net interest margin (NIM) elevated 43 bps on a sequential basis to 2.94%, but came down 21 bps on a y-o-y basis.
Union Bank of India MD and CEO Rajkiran Rai G mentioned the lender was expecting development in each retail and corporate segments. “We are expecting more sanctions in the March quarter,” he added. The state-owned bank also specified that the net profit for the duration of Q3FY21 was subdued simply because in the comparable quarter final year the combined entity got a enhance from Essar Steel recovery. Andhra Bank and Corporation Bank have been amalgamated into Union Bank of India on April 1, 2020.
The lender’s asset good quality also showed an improvement for the duration of the December quarter. Gross non-performing assets (NPAs) ratio enhanced 122 bps to 13.49%, compared to 14.71% in the earlier quarter. Similarly, net NPAs ratio came down 86 bps to 3.27% from 4.13% in the September quarter. The lender has not classified any NPAs due to the fact August 31, 2020, due to the interim order of the Supreme Court. “The pro forma gross NPAs stood at 15.28% and net NPAs at 5.02%,” Rai mentioned. The lender was expecting net NPAs among 4 and 5% in the next quarter (Q4FY21), he added.
Advances remained flat on a y-o-y as nicely as sequential basis at Rs 6.51 lakh crore. The lender is, even so, expecting substantial credit development in the next quarter. “We are expecting credit growth of 4-6% in the next quarter (Q4FY21),” Rai mentioned.
Deposits grew 3% YoY to Rs 8.82 lakh crore, but remained flat sequentially. Current account savings account (CASA) ratio remained at 32.67%, compared to 34.67% in the September quarter. The capital adequacy ratio stood at 12.98% at the finish of the December quarter, compared to minimum regulatory requirement of 10.875%.