The Hindu Business Line : Non-interest income buoys Union Bank net

Mumbai, Oct. 24 Union Bank of India has recorded an increase in net profit of 42 per cent at Rs 276 crore for the quarter ended September 30, up from Rs 194 crore in the same quarter last year.

The growth came from non-interest income, which grew by a substantial 77 per cent to Rs 271 crore, from Rs 153 crore last year.

Explaining the reason for the huge rise in other income, Mr M.V. Nair, Chairman and Managing Director, Union Bank of India, said, “In investments we are actively operating in equity and government securities. There was a huge amount of opportunity to earn money in the last six months. Forex operations and recovery from written off assets also gave us good income. The sale of third party products like mutual funds and insurance, which saw a 55 per cent growth, also added to the fee income.”

The bank’s net interest income saw a moderate rise of 7 per cent to Rs 673 crore (Rs 627 crore).

Cuts deposit rates

The bank also announced a cut in deposit rates between 25 and 100 basis points on deposits of varying maturities. On deposits of less than Rs 15 lakh, the revised rates for one-year term deposits is 8.25 per cent (9 per cent) and on deposits of 3-5 years it is 8.75 per cent (9 per cent).

Mr Nair said that any slowdown in deposit growth due to reduction of interest rates would be seen in the December quarter. “If there is a slowdown in deposit growth, then it may get reflected in lending rates,” he said.

For this fiscal, the bank has set a target a 24 per cent growth in deposits which amounts to Rs 1,05,000 crore and 25 per cent growth in credit, which is about Rs 80,000 crore.

The net interest margin fell to 2.56 per cent (2.76 per cent), due to increase in cost of funds to 6.02 per cent (5.04 per cent).

Net NPAs were at 0.65 per cent to total advances, down from 1.24 per cent last year. Capital Adequacy Ratio was 11.55 per cent (10.79 per cent).

The shares of Union Bank closed at Rs 160.8 on the BSE, up 3.38 per cent from the previous close of Rs 155.55.

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