Union Bank of India reported a net loss of ₹2,583 crore in the fourth quarter as it preferred to make one-go provisions towards stressed accounts referred to the National Company Law Tribunal and investment depreciation, instead of staggering them over four quarters. It had reported a net profit of ₹108 crore in the year-ago quarter.
In FY2018, the public sector bank reported a net loss of ₹5,212 crore against a net profit of ₹573 crore in FY2017.
Net interest income (the difference between interest earned and interest expended) in the reporting quarter was down 8 per cent year-on-year (y-o-y) at ₹2,193 crore. Non-interest income nudged up 3 per cent y-o-y at ₹1,485 crore. Rajkiran Rai G, Managing Director & CEO, attributed the net loss, among others, to the bank taking a conscious call to make full provisions instead of availing the option of dispensation (spreading the provisions over four quarters).
The bank saw a huge jump in provisions at ₹5,639 crore (₹1,505 crore in the year-ago quarter) towards bad loans. Slippages during the quarter amounted to ₹10,043 crore. Accounts with an aggregate exposure of about ₹4,200 crore slipped due to the Reserve Bank of India’s revised framework for resolution of stressed assets.
Due to a sharp rise in bond yields during the quarter, provisions towards investment depreciation soared to ₹1,120 crore (₹604 crore).
Global net interest margin declined to 1.90 per cent in March 2018 against 2.27 per cent in March 2017.
Gross non-performing assets rose to 15.73 per cent of gross advances as of March-end 2018 against 13.03 per cent as of March-end 2016.