Money & Banking

Union Bank of India posts Q1 net profit of ₹333 crore

Our Bureau. Mumbai | Updated on August 21, 2020

In its first quarterly results after the amalgamation of Andhra Bank and Corporation Bank with it, Union Bank of India (UBI) reported a standalone net profit of ₹333 crore in the quarter ended June 30, 2020.

The public sector bank had reported a net profit of ₹381 crore in the year-ago period.

The bank, in its analyst presentation, said Andhra Bank and Corporation Bank amalgamated into it with effect from April 1. Accordingly, financials as on June 2019 and March 2020 are for the amalgamated entity, it added.

Rajkiran Rai G, MD and CEO, said there has been a substantial improvement in net interest income (NII).

NII (difference between interest earned and interest expended) was up 17 per cent at ₹6,403 crore (₹5,468 crore in the year-ago period).

Other income (comprising core non-interest income, treasury income and recovery in written-off accounts), however, was down 23 per cent at ₹1,462 crore (₹1,897 crore).

Operating profit nudged up 3 per cent at ₹4,034 crore (₹3,918 crore).

Slippages were lower at ₹1,750 crore (₹4,303 crore in the preceding quarter).

Reduction in non-performing assets (NPAs) was sharply down at ₹1,753 crore (₹7,542 crore: preceding quarter) as the pandemic threw recovery operations out of gear.

Rai said 28 per cent of the bank’s term loans by value are under Covid-19 related moratorium as of June-end 2020.

The bank’s board has given approval for one-time restructuring of personal and MSME loans, and instructions will soon be given to the branches on the standard operating procedure to be followed, he added.

The Union Bank chief underscored that the amalgamation will result in cost savings of ₹3,600 crore over three years.

Rai said UBI will disinvest its 30 per cent stake in IndiaFirst Life Insurance Company by December 2020. This sale is expected to fetch about ₹900 crore to ₹1,000 crore.

Originally, erstwhile Andhra Bank was owning 30 per cent stake in IndiaFirst Life. UBI currently has 25.10 per cent stake in Star Union Dai-Ichi Life Insurance Company.

Rai said UBI has board approval for raising ₹10,300 crore, comprising ₹6,800 crore equity and the balance in the form of additional tier-I capital.

Published on August 21, 2020

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