UBI reports net profit of ₹42 cr

United Bank of India has continued its profit-making spree and reported a net profit of ₹41.78 crore in the October-December quarter this fiscal, against a net loss of ₹1,238.08 crore in the corresponding quarter last fiscal.

However, because of fresh slippage by corporate borrowers, including some restructured loans, the net non-performing assets (NPA) rose to ₹5,240 crore at the end of the third quarter of 2014-15.

Removing restrictions P Srinivas, MD and CEO, said at a press conference that the bank so far has restructured debt worth ₹7,697 crore. During the third quarter, cash recovery was ₹194 crore, bad loans worth ₹318 crore were upgraded and ₹340 crore were written off.

He said the bank has asked the RBI to remove restrictions on its corporate borrowing. After incurring net losses in the second and third quarters last fiscal, UBI has reported profit for the fourth consecutive quarter. UBI currently also faces branch expansion restrictions.

Recruitment ban Srinivas said the ban on recruitment has been lifted. “UBI will now recruit 700 officers and 500 clerks,” the MD said.

The bank is looking at expanding its loan book, particularly among customers in retail, agriculture and SME segments.

“For the SME segment, we have a back office appraisal system. The branches would have the marketing push,” he added.

In the forthcoming summer season, the bank was gearing up to lend towards cold storage and tea segments.

He said that in the next fiscal, the aim was to bring down the gross NPA ratio, currently at 12.03 per cent to a single digit figure. The bank also targets a net interest margin of 2.5 per cent next year. In Q3, the bank could record 2.24 per cent NIM.

Owing to restrictions on credit deployment and muted credit deployment, the bank’s interest income moderated to ₹2,509 crore in Q3 (₹2765 crore). As of December 31, 2014 the interest income stood at ₹7,609 crore.

Capital infusion The bank shed its bulk deposit of ₹8,115 crore during the first nine months of the year and stood at ₹7,487 crore. The MD said that the Centre has agreed to infuse capital worth ₹1,000 crore through fresh equity investment. 

The government is also expected to convert preference shares worth ₹525.23 crore into equity shares.

Additionally, it is likely to pick up bank's perpetual debt instrument of ₹500 crore.

The UBI stock on Tuesday closed on BSE at ₹37.10, down 1.07 per cent.