Target: ₹130

CMP: ₹110.20

At its analyst day meet, Union Bank of India’s top management team highlighted various initiatives undertaken by the bank to improve its underwriting standards and to augment credit and deposit growth. The management also reiterated its focus on a speedy and timely resolution of stressed assets and improvement of key operational parameters.

Union Bank is witnessing healthy traction in loan growth, led by continued strength in Retail. Corporate and SME segments are also seeing improving trends. Overall, the management expects credit growth to be about 10-12 per cent in FY24. On the deposit front, the bank is growing retail deposits at a steady pace with an aim of growing deposits through CASA/retail term and not via bulk deposits.

Fifty per cent of the loan book is linked to MCLR and out of the total MCLR book half has got re-priced in H1-FY24 and remaining will get re-priced in H2. The bank expects NIM to remain at about 3 per cent by end of FY24.

The bank has been reporting a healthy performance over the past few quarters, with earnings driven by strong NII, healthy margins, higher other income and moderation in provisions. Fresh slippages have been moderating, which, coupled with healthy recoveries and upgrades, have resulted in an improvement in asset quality ratios.