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Union Bank of India (UBI) reported a 37 per cent year-on-year (yoy) decline in standalone net profit at ₹727 crore in the third quarter (Q3FY21) ended December 31, 2020 against ₹1,159 crore in the year ago quarter.
The public sector bank’s standalone net profit in the reporting quarter, however, was up 41 per cent quarter-on-quarter (QoQ) vis-a-vis preceding quarter’s ₹517 crore.
Rajkiran Rai G, MD & CEO, explained that, “In Q3FY20, there was a recovery in the Essar Steel account… In case of (erstwhile) Corporation Bank, they had written back about ₹1,500 crore as profit. So, that was one-off entry…that is pushing the numbers of the previous year up. Otherwise, operating performance is better this year.”
Andhra Bank and Corporation Bank were merged with UBI with effect from April 1, 2020. The bottomline in the third quarter was supported by a ₹672 crore write-back in tax expenses.
Income
Net interest income (the difference between interest earned and interest expended) was up 5 per cent yoy at ₹6,590 crore (₹6,285 crore in the preceding quarter). Non-interest income, comprising total fee income, dividend income, trading gains, recovery from technically written-off accounts, was down 18 per cent at ₹3,016 crore (₹3,667 crore).
GNPAs declined to 13.49 per cent of gross advances as at December-end 2020 against 14.71 per cent as at September-end 2020. Net NPAs declined to 3.27 per cent of net advances as at December-end 2020 against 4.13 per cent as at September-end 2020.
With proforma slippages (adjusted for the Supreme Court’s interim order), Gross and Net NPA ratio would have been 15.28 per cent and 5.02 per cent, respectively.
Non-performing asset (NPA) loan provisions were down 22 per cent yoy at ₹3,036 crore (₹3,898 crore). However, provisions for standard assets rose to ₹2,227 crore against a write-back of ₹211 crore in the year ago quarter.
Restructuring book
Rai said the restructuring book for Covid-19 related stress stood at ₹16,726 crore. Out of that ₹3,272 crore has already been restructured up to December 31, 2021. The expected restructuring ₹13,454 crore in the next six months, he added.
UBI is expecting to recover about ₹4,000 crore to ₹5,000 crore in current quarter. Of this, a chunk of the recovery is expected to come from two large corporate accounts which have been resolved under the Insolvency & Bankruptcy Code.
Rai said post-amalgamation, UBI made savings of about ₹800 crore through synergy realisation till December-end 2020. It expects savings of about ₹3,600 crore over three years.
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