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Union Bank of India (UBI) reported a 21 per cent year-on-year (YoY) increase in second quarter net profit on the back of a rise in net interest income, lower loan loss provisions and write-back in provision on investments even as its advances portfolio grew at a decent clip and asset quality improved.
The public sector bank reported a net profit of ₹1,848 crore in the reporting quarter against ₹1,526 crore in the year ago quarter.
Net interest income (difference between interest earned and interest expended) was up about 22 per cent YoY to ₹8,305 crore (₹6,829 crore in the year ago period).
Non-interest income, however, was down about 18 per cent YoY to ₹3,276 crore (₹3,978 crore), mainly due to a decline in treasury income and recovery in written-off accounts.
Net interest margin improved to 3.15 per cent from 2.95 per cent in the year ago quarter.
Loan loss provisions were down about 24 per cent YoY at ₹2,816 crore (₹3,693 crore). The bank booked a write-back on investment of ₹113 crore (₹53 crore). Tax outgo was about 21 per cent less YoY at ₹652 crore (₹824 crore).
Gross non-performing assets (NPAs) declined to 8.45 per cent of gross advances as of September-end 2022 against 10.22 per cent in the preceding quarter.
Net NPAs declined to 2.64 per cent of net advances against 3.31 per cent.
Recovery path
A Manimekhalai, MD & CEO, emphasised that out of the recovery target of ₹15,000 crore for FY23, the Bank already crossed recovery (cash recovery, upgradation, and recovery in technical write-off & dummy ledger interest) of ₹8,900 crore in the first half of the financial year.
Total recovery in the reporting quarter was 10 per cent lower at ₹5,142 crore (₹5,685 crore). Slippages were lower at ₹2,913 crore (₹6,745 crore).
Domestic advances grew 21.54 per cent YoY to ₹7,52,469 crore. Overseas advances rose 37.38 per cent YoY to ₹21,221 crore.
Domestic deposits were up 14.21 per cent YoY to ₹10,42,995 crore while overseas deposits were down about 66 per cent to ₹270 crore.
Good pipeline
Manimekhalai said the Bank has a good pipeline of advances, with unutilised limits amounting to about ₹21,000 crore. She observed that the Bank has excess statutory liquidity ratio securities of about ₹15,000 crore which could be channelised towards credit.
Ashok Chandra, Chief General Manager, said the Bank has exposure aggregating ₹1,000 crore to three stressed assets for which expression of interest has been floated by the National Asset Reconstruction Company Ltd (NARCL) and recovery of about ₹445 crore is expected in the current quarter.
Overall, UBI has identified 11 stressed accounts aggregating ₹6,000 crore to transfer to NARCL.
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