Union Bank of India swings to profit on income growth

Mumbai: Union Bank of India swung to a net profit in the quarter ended September 2020 from a loss a year earlier led by higher income growth even as provisions stayed under control.

Results released on the stock exchanges showed that the bank made a standalone net profit of Rs 517 crore in the quarter ended September 2020 compared to a loss of Rs 1,194 crore a year earlier. The bank however said its results cannot be compared to a year earlier as earnings this year include Andhra Bank and Corporation Bank which were merged with Union Bank effective April 1.

In a press release Union Bank said its net interest income (NII) increased 6% to Rs.6,293 crore as compared to Rs.5,934 crore last year.

Other income at a standalone level stood at Rs 2,308 crore doubling from Rs 1,143 crore a year ago.

Provisions increased 7% to Rs 4141 crore from Rs 3885 crore a year earlier.

The Supreme Court stay on classifying loans as NPAs kept bad loans under check. As a results gross NPA ratio dropped to 14.71% from 15.75% in September 2019. Without the Supreme Court stay gross NPAs would have been 15.37%.

Provision coverage ratio (PCR) improved to 83% as on September 30, 2020 compared to 74% a year ago.

The bank has made a provision of 422 crore for these loans assuming that they would slip into NPA. The bank also made a provision of Rs 150 crore towards the interest receivable on these borrower accounts.

A drop in cost of deposit also helped the bank. Cost of deposits fell to 4.82% from 5.70% a year earlier.