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Higher provisioning for bad loans dragged down United Bank of India’s net profit 79 per cent to Rs 31 crore in the quarter ended March 31, 2013.
The bank’s board has recommended a dividend of 21 per cent for 2012-13.
Shares of United Bank of India closed at Rs 58.25, down by 1.10 per cent on the BSE on Tuesday.
“The drop in net profit is on account of a rise in provisioning. Had we made lesser provisions then the profits would have looked better, but our aim was to strengthen the balance-sheet,” said Archana Bhargava, Chairperson and Managing Director, United Bank, here on Tuesday.
Asset quality
Provisions rose by 147 per cent to Rs 759 crore, of which, the cover for non-performing assets (NPA) was nearly Rs 338 crore.
Slippages during the quarter rose 79 per cent to Rs 1,057 crore. “Much of these slippages were from large industry sectors such as aviation, steel, power, telecom and textiles,” she said.
Gross NPA grew to 4.25 per cent (3.41 per cent), and net NPAs, to 2.87 per cent (1.72 per cent). The bank aims to bring down gross NPA to 2 per cent by the end of this fiscal. The drop in net interest income was on account of interest reversals on bad loans and reduced interest earned on restructured accounts, she said.
Net interest margin also declined to 2.67 per cent (3.11 per cent).
This fiscal, United Bank aims to achieve 18 per cent growth in business, to Rs 2-lakh crore.
The bank plans to raise Rs 1,000-crore capital through the qualified institutional placement (QIP) route this fiscal.
The bank also plans to approach the Union Government for a rights issue or preferential allotment of shares. The capital will be used to fund growth both in the domestic and overseas markets.
According to Archana Bhargava, while capital infusion by way of rights issue or preferential allotment might take place during the latter part of this fiscal, the bank will go ahead with the QIP by the second quarter.
“We plan to upgrade our representative offices in Bangladesh and Myanmar into full-fledged branches. We also plan to foray into one of the South African countries. We will need capital for this,” Bhargava said.
The bank’s capital adequacy ratio stood at 11.66 per cent (12.69 per cent) as on March 31, 2013.
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