The Hindu Business Line : Non-interest income boosts United Bank net 9%

United Bank of India has posted a net profit of Rs 74.70 crore during the quarter ended December 31, 2007 compared with Rs 69.76 crore in the same period of last year, posting around nine per cent growth. Cumulatively, i.e., in first nine months, the net profit at Rs 307.21 crore (Rs 231.84 crore in nine months last year) posted a growth of 32.5 per cent on year-on-year basis.

Mr P.K. Gupta, Chairman and Managing Director of the bank, attributed the improvement in the net profit, particularly in the third quarter, to the growth of non-interest income as the net interest income during the period dropped to Rs 170 crore from Rs 292 crore in the third quarter of the last year. The interest income during the quarter under review was Rs 950 crore (Rs 714 crore) and income expended Rs 680 crore (Rs 422 crore)

A higher cost of deposits not matched by a corresponding increase in the yield on advances was responsible for this, Mr Gupta said. Also, the advances growth at 17.7 per cent in first nine months had been lower than the targeted 25 per cent growth set for the whole year. “We’re hopeful of achieving the targeted growth by significantly stepping up our advances in the current quarter,” he observed.

The non-interest income during the quarter under review on the other hand posted an impressive growth at Rs 122 crore (Rs 98 crore). Within the non-interest income, the profits from treasury operation amounted to Rs 53.35 crore (Rs 18.28 crore) and income from foreign exchange business Rs 9.2 crore (Rs 1.18 crore). Cumulatively, in first nine months, the non-interest income at Rs 295.11 crore (Rs 202.56 crore) showed a growth of more than 45.7 per cent. Of this, the treasury income amounted to Rs 117.46 crore (Rs 22.28 crore) and income from forex operations Rs 28.16 crore (Rs 12.94 crore), which means the bulk of the non-interest income in first nine months was actually earned in the third quarter.

Other factors like relief in depreciation of securities also contributed to the profit during the quarter under review. Last year this quarter, the depreciation was to the tune of Rs 87 crore but nil during the quarter under review.

Also, as Mr Gupta pointed out, during the quarter under review, there was higher provisioning, the coverage ratio being 67.09 per cent (61.27 per cent).

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