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State-owned United Bank of India (UBI) reported a net profit of ₹124 crore for the quarter ending September 30, 2019. In the year-ago-quarter, the bank made a net loss of ₹883 crore. According to Ashok Kumar Pradhan, Managing Director and CEO, the improved performance comes on the back of reduction in non-performing assets, lower provisioning and better net interest income.
“Key finances of the bank improved year-on-year, thereby leading to a turnaround. Operating profit, at ₹599 crore in Q2 FY20, is a 191 per cent increase over the ₹206 crore that we have reported in Q2 FY19,” he told reporters during a press meet here on Wednesday.
Improved performace saw the bank report a near 75 per cent jump in net interest income on a y-o-y basis to ₹773 crore for the quarter under review (₹443 crore). Total income too rose by 16 per cent y-o-y to ₹3,014 crore. Provisions and contingencies declined by over 70 per cent to ₹436 crore whencompared to the ₹1,481 crore in the corresponding quarter last fiscal. The lender said an additional provision of ₹47 crore has been made in respect of eligible NCLT accounts by the end of second quarter.
Provision for NPAs declined by over 47 per cent on a year-on-year basis, while the provision coverage ratio (PCR) improved to 74.89 per cent during the quarter under review. PCR stood at 60.10 per cent in the year-ago-period.
The lender said that around ₹47 crore has been additionally provided in respect of eligible NCLT (list 1 and list 2) accounts as on September 30, 2019. “Actual provision for NCLT (list 1 and list 2) accounts stands at ₹3,322.77 crore, instead of ₹3,276 crore as per IRAC norms,” it further added.
Asset quality
In terms of non-performing assets (NPAs), the bank brought down its net NPAs to 7.88 per cent as on September 30, from 14.36 per cent by the end of September 2018. In absolute terms, net NPAs declined by 38 per cent to ₹5,381 crore against ₹8,658 crore in the year-ago-period.
Gross NPAs improved to 15.51 per cent (from 22.69 per cent) and stood at ₹11,544 crore in value terms (from ₹15,163 crore). During the quarter under review, the bank reported fresh slippages to the tune of ₹1,040 crore, with nearly ₹800 crore coming from corporates. The remaining ₹200 core are retail loan slippages. In the year-ago period (Q2 FY20), slippages were at ₹1,300 crore.
Meanwhile, recoveries from NPAs were ₹1,150 crore for the quarter ending September 30, 2019. Recoveries from shadow assets were at ₹100 crore.
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