Higher provisioning for non-performing assets (NPAs) dragged down the net profit of United Bank of India by 81 per cent to Rs 42 crore during the October-December quarter.

Total provisioning during the quarter grew by 126 per cent to Rs 450 crore (Rs 199 crore).

According to Sanjay Arya, Executive Director, United Bank of India, NPA provisioning increased by 238 per cent to Rs 314 crore (Rs 93 crore) during the quarter under review.

“Our NPA provisioning was higher during this quarter as there was some deterioration in asset quality. But moving forward we hope the asset quality to improve,” Arya told Business Line. Fresh slippages stood at Rs 660 crore and came primarily from the bank’s exposures to the steel and textile sectors.

Gross NPAs as a percentage of total advances increased to 4.42 per cent (3.28 per cent), while net NPAs rose to 2.22 per cent (2.01 per cent).

The rise in bad assets affected the bank’s profitability dragging down the net interest margin to 2.68 per cent (3.3 per cent). The bank aims to achieve NIM of 2.75-2.8 per cent by the end of this fiscal, he said.

Capital adequacy ratio stood at 11.88 per cent as on December 31, 2012. The bank is hopeful of getting capital infusion of Rs 100 crore from the Government this quarter. Shares of United Bank of India closed at Rs 70.80, down by 3.34 per cent on the BSE on Tuesday.

shobha.roy@thehindu.co.in

(This article was published on February 5, 2013)
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