The Hindu Business Line : Union Bank Q1 net profit marginally up at Rs 228 cr

Union Bank of India reported a flat net profit of Rs 228 crore for the quarter ended June 30, 2008, against Rs 225 crore in the same quarter last year. According to the bank, the profit would have been higher but for the sharp depreciation in its investment portfolio. The bank made a marked-to-market provision of Rs 339 crore on its bond portfolio for the quarter.

Total deposits grew by 23 per cent, while advances grew by 19 per cent. Treasury income was substantially lower at about Rs 8 crore (Rs 34 crore).

The bank was able to maintain its net interest margin at 2.63 per cent, despite the increase in the deposit and lending rates, said Mr M.V. Nair, Chairman and Managing Director of the bank.

Mr Nair told Business Line, “Our NIM was 2.65 per cent in the quarter ended December 2008. It was 2.63 per cent as on March 2008 and we have maintained it in the June quarter as well. Since we have raised our BPLR we will get the positive impact in the next nine months. Also, our retail deposits have grown by 33 per cent and the share of CASA has gone up by 150 basis points. So, our cost is coming down.”

The share of low-cost current and savings account deposits to total deposits has increased to 34.76 per cent (33.26 per cent).

Cost of funds increased to 5.6 per cent (5.41 per cent) and cost of deposits also increased to 6.06 per cent (5.72 per cent) due to higher interest rates.

Yield on advances increased to 10.13 per cent (10.03 per cent), while yield on funds decreased to 8.23 per cent (8.37 per cent).

For the current fiscal, the bank has set a target of 23 per cent growth in deposits and 22 per cent growth in advances, said Mr Nair.

Under the Central Government’s debt waiver scheme, the bank has waived off loans amounting to Rs 1,032 crore to over four lakh farmers.On Friday, shares of Union Bank closed at Rs 128.6, down 0.54 per cent from the previous close of Rs 129.3, on the BSE.

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