The Hindu Business Line : Union Bank Q4 net up 57% on higher net interest income

SCORECARD: Mr M.V. Nair (right), CMD, Union Bank of India, with Mr R.S. Reddy, Executive Director, addressing a press conference in Mumbai on Monday. — Paul Noronha

Mumbai May 7 Buoyed by a strong growth in net interest income and fee-based income, Union Bank of India has posted a 57.24 per cent increase in net profit at Rs 228 crore for the fourth quarter ended March 31, 2007, against Rs 145 crore for the corresponding quarter of the previous year.

Net interest income grew 40.80 per cent to Rs 842 crore (Rs 598 crore).

Mr M.V. Nair, Chairman and Managing Director, Union Bank of India, said the net interest margin in the quarter increased to 3.52 per cent (2.80 per cent).

Non - interest income increased to Rs 242 crore (Rs 174 crore). "We would continue to focus on fee-based income," Mr Nair, said.

Total income went up 33.85 per cent to Rs 2,337 crore (Rs 1,746 crore).

Total expenditure also increased by 19.08 per cent to Rs 1,579 crore (Rs 1,326 crore).

Net profit for the full year ended March 31, 2007 went up 25.19 per cent to Rs 845 crore against Rs 675 crore the previous year.

Net interest income went up 17.47 per cent to Rs 2,790 crore (Rs 2,375 crore).

Deposits grew 14.96 per cent to Rs 85,180 crore (Rs 74,094 crore) last year while gross advances went up 16.50 per cent to Rs 63,658 crore.

Capital adequacy ratio (CAR) of the bank stands at 12.80 per cent (11.41 per cent).

Basel-II

Mr Nair said, "the bank is Basel II compliant and would like to keep our CAR at 11 per cent. We will need an additional capital of Rs 1,500 crore to maintain the ratio. Our bank has adequate headroom to raise the capital through subordinated bonds or any other innovative instruments. We would not like to go for equity dilution."

Credit growth during the year has mainly come from SME, retail and agriculture contributing 35 per cent, 17 per cent and 30 per cent, respectively.

The bank has set a 25 per cent target for the credit growth for the current fiscal.

The bank's percentage of net non-performing assets (NPA) to net advances declined to 0.96 per cent (1.56 per cent) while the gross NPA declined to 2.94 per cent (3.84 per cent).

Net interest margin is at 3.05 per cent (3.03 per cent).

"We want CASA as a percentage of total deposits to reach 40 per cent by 2010 and 36 per cent by 2008," Mr Nair added.

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