The Hindu Business Line : Union Bank Q2 net rises by 31 %

Mr M.V. Nair (left), Chairman and Managing Director, Union Bank of India, with Mr T.Y. Prabhu, Executive Director, at a press conference in Mumbai on Saturday.

Our Bureau

Mumbai, Oct. 25 Union Bank of India’s net profit surged by 31.16 per cent to Rs 362 crore for the quarter ended September 30, aided by a 49 per cent increase in its net interest income.

However, the bank’s non-interest income declined marginally due a loss in investments to the tune of Rs 38 crore.

“This was a difficult quarter. Despite the rising cost of resources, the bank’s net interest margin increased to 3.01 per cent, up 52 basis points, from 2.47 per cent in the year ago period,” said Mr M.V. Nair, Chairman and Managing Director, Union Bank of India.

While the bank’s cost of deposits fell to 6.25 per cent (6.41), the yield on advances increased to 11.16 per cent (10.26).

The bank’s net NPAs also declined by 51 basis points to 0.14 per cent, indicating a significant improvement in asset quality, he said.

Asked of the possibility of an increase in delinquencies in the third quarter, Mr Nair said the bank has been performing stress tests on its assets on a regular basis and most of the accounts are performing well.

The delinquencies have come down in the retail, SME and agricultural sectors.

However, the bank is not lending aggressively to the real estate sector, he added.

The bank’s CASA also improved by 60 basis points from 32.5 per cent to 33.1 per cent for the quarter under review.

The bank aims to grow its total balance sheet size by 22 per cent to Rs 2,20,000 crore by the end of this fiscal, Mr Nair said while elaborating the bank’s future plans.

For this, the bank is targeting a 23 per cent deposit growth and 22 per cent advances growth.

The bank would focus on increasing its non-interest income and containment of the cost of funds.

Retail, agri business, SME and corporates will be the four growth engines, he added.

On Friday, the shares of the bank fell to Rs 123.25, against the previous close of Rs 139.55.

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