The Hindu Business Line : Union Bank Q4 net more than doubles

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Union Bank Q4 net more than doubles

Boosted by lower tax outgo, staff cost

Paul Noronha

Going strong: Mr M.V. Nair (right), Chairman and MD, Union Bank of India, and Mr R.S. Reddy, Executive Director, at a press meet in Mumbai on Wednesday. —

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Mumbai, May 7 Lower outgo on account of taxation and staff cost helped Union Bank of India to report a 128 per cent increase in net profit for the quarter ended March 31, 2008.

The after tax profit for the quarter increased to Rs 521 crore from Rs 229 crore in the corresponding quarter last year.

However, the net interest income was marginally lower due to high interest costs, but other income increased by 29 per cent.

The bank has proposed a dividend of Rs 4 per share of Rs 10 face value (40 per cent), against Rs 3.50 last year.

Explaining the increase in profits, Mr M.V. Nair, Chairman and Managing Director, said the bank got about Rs 17 crore as write back on the tax it paid last year for income from venture funds. The bank also added Rs 90 crore to its income from the provision it had made for employee costs under AS-15 in the first three quarters.

“In the last quarter we made a one-time provision of Rs 394 crore for the entire AS-15 from our reserves, as we have enough strength in our reserves,” Mr Nair said.

As the cost of deposits increased to 6.38 per cent against 5.48 per cent, net interest income for the fourth quarter was lower at Rs 834 crore (Rs 842 crore.) However, other income increased to Rs 311 crore from Rs 242 crore.

For the full year 2007-08, net profit increased by 64 per cent and other income increased by 58 per cent.

The net interest margin for the year fell to 2.8 per cent (3.05 per cent). Mr Nair said, “In the January-March period of 2006-07, we raised about Rs 10,000 crore of high cost deposits, at the rate of 10 per cent. Those deposits have matured now and, therefore, the impact was seen in the fourth quarter of 2007-08. But those deposits will now get re-priced lower by about 1 per cent.” For the full year, the cost of deposits increased to 6.33 per cent (6.19 per cent).

The bank saw good recoveries in its bad assets, which brought down its Non Performing Assets considerably. The bank recovered Rs 746 crore. Of this Rs 177 crore was from written off assets.

Union Bank share closed at Rs 173.55 on Wednesday, 0.75 per cent from Rs 172.25 on the BSE.