The Hindu Business Line : Union Bank Q3 net up 11.8 pc

Higher income: Mr M.V. Nair (left), CMD, Union Bank of India, and Mr R.S. Reddy, ED, announcing the bank's results in Mumbai on Thursday. - Shashi Ashiwal

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Mumbai Jan 25 Union Bank of India has reported growth of 11.8 per cent in third quarter net profit to Rs 255.84 crore from Rs 229.08 crore in the corresponding previous period.

Mr M.V. Nair, Chairman and Managing Director, said that the bank had seen an increase in interest as well as non-interest income during the period under review.

Net interest income rose 7.3 per cent to Rs 685.87 crore (Rs 639.27 crore), while other income rose 47.5 per cent to Rs 205.24 crore (Rs 139.01 crore ).

Total income went up by 24.33 per cent to Rs 2,054 crore (Rs 1,652 crore), while total expenditure grew by 26.5 per cent to Rs 1,549 crore (Rs 1,224 crore).

In the first nine months of the fiscal, total deposits edged up 9.68 per cent to Rs 77,292 crore from Rs 70,469 crore in the previous period.

The cost of deposits at the end of December2006 increased to 5.15 per cent (4.73 per cent).

The share of current accounts and savings accounts improved to 34.9 per cent from 33.49 per cent in the previous period.

Gross advances grew by 14.96 per cent to Rs 58,303 crore (Rs 50,718 crore), while yields improved to 8.72 per cent (8.28 per cent).

Advances to agriculture stood at Rs 9,756 crore (Rs 7,921 crore), while retail loans increased to Rs 13,016 crore (Rs 10,543 crore). Retail loans accounted for 22 per cent of the total portfolio.

Net interest margin for the first nine months dropped to 2.89 per cent from 3.12 per cent earlier.

Rates to harden

Mr Nair said that to maintain interest rate margins, the cost would have to eventually be passed on to the borrower. "We expect interest rates to continue hardening till the end of the fiscal."

The capital adequacy ratio improved to 13.21 per cent (10.91 per cent).

The percentage of net NPAs declined to 1.12 per cent (1.15 per cent). Cash recoveries and upgradations improved to Rs 566 crore (Rs 405 crore).

Mr Nair also said that the bank had received permission to set up a representative office in Shanghai.