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Union Bank of India recorded an almost four-fold jump in net profit at ₹575 crore in the third quarter ended December 31, 2019, against ₹153 crore in the year-ago period, on higher recoveries and lower provisioning requirement.

The public sector bank saw robust recovery from three large accounts – Essar Steel, Ruchi Soya and Prayagraj – aggregating to about ₹2,000 crore. Overall, cash recovery plus upgradation in the reporting quarter was ₹2,837 crore (₹1,303 crore in the preceding quarter). Recovery in written-off accounts was ₹2,201 crore (₹1,878 crore).

The requirement of provisions towards non-performing assets (NPAs) was lower at ₹1,570 crore (₹3,328 crore in the preceding quarter). The bank received ₹255 crore as write-back in standard assets provisions in the reporting quarter. In the preceding quarter, it had to make a provision of ₹570 crore towards standard assets.

“There has been a very steady improvement in operating efficiencies….In this quarter we had good recoveries…In the nine months so far, recovery plus upgradation amounted to ₹4,910 crore,” said Rajkiran Rai G, MD and CEO.

He emphasised that his bank expects ₹3,000 crore recovery in the fourth quarter, including from accounts undergoing the Insolvency and Bankruptcy Code (IBC) process. Net interest income was up 26 per cent year-on-year (y-o-y) at ₹3,134 crore against ₹2,493 crore in the year-ago period.

Non-interest income edged up 1.53 per cent y-o-y to ₹1,112 crore (₹1,095 crore). Slippages during the quarter were higher at ₹5,112 crore (₹4,219 crore in the preceding quarter). Of the total ₹5,112 crore slippages, a large housing finance company (DHFL) alone accounted for ₹2,260 crore.

Rai observed that the housing finance company account has been classified as a red-flagged account. However, has not yet been classified as a fraud account. “But for this one (housing finance company) account, the slippage is in the normal range. The bank has provided 25 per cent for this account,” he said.

As of December-end 2019, the gross NPAs position improved to 14.86 per cent of gross advances against 15.66 per cent as of December-end 2018. Net NPAs position, too, improved to 6.99 per cent of net advances against 8.27 per cent.

Global advances

The bank’s global advances were up 5.8 per cent y-o-y to ₹3,36,064 crore as of December-end 2019. This was supported by 10 per cent y-o-y growth in retail advances; 5.3 per cent growth in micro, small and medium enterprises; and 3.9 per cent y-o-y growth in agriculture advances.

Rai said the bank has a strong sanctions pipeline. In the fourth quarter, the bank expectsdisbursements of ₹10,000 crore. Deposits grew 10.6 per cent y-o-y to ₹4,45,091 crore.

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