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Suresh Krishnamurthy

FRESH investments can be considered in the stock of Union Bank of India, which trades at a discount to its book value of Rs 48 and at a multiple of less than four times its earnings for the 12-month period ended June 2003. The stock offers a dividend yield of 4.7 per cent, with the prospect of growth in dividends over the next few years.

The valuation for the stock is lower than that commanded by other comparable stocks such as Bank of Baroda and Bank of India. However, the bank's performance, over the last few years, on parameters such as advances growth rate, reduction in cost of funds and proportion of non-performing assets are superior compared with most of its peers. Its attempts to improve the proportion of non-fund income and the drive to reduce non-performing assets to 2 per cent from the March 2003 level of 4.6 per cent also augur well.

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