Union Bank Q2 net profit up 30% as margins improve

Mumbai: Union Bank of India has reported a 30% year-on-year increase in quarterly net profit, supported by higher net interest income (NII) and a drop in provisions. Net profit for the September quarter increased to ₹5,537 crore from ₹4,249 crore a year ago, while net interest income rose 20% to ₹10,582 crore, the bank said on Monday. Provisions nearly halved to ₹701 crore in the September quarter, down from ₹1,397 crore a year ago.

Total advances in the September quarter increased 19% year-on-year to ₹11.6 lakh crore, led by a 17% growth in domestic advances, which was supported by a 24% increase in corporate advances to ₹5.2 lakh crore. The bank has a corporate loan pipeline of ₹1 lakh crore.

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Net interest margin (NIM), or the difference between the yield earned on loans and that paid for deposits without taking into account tax refund gains, in the September quarter improved to 2.9% from 2.7% a year ago.

Chief executive officer Asheesh Pandey said the bank aims to improve NIM beyond 3% by next fiscal year. "We have started building up from when rates were on the way down. Now that the trajectory has changed and the repo rate has been hiked by 25 basis points, we expect to further improve margins," Pandey said.

The bank collected $2.3 billion through FCNR (B) deposits, about 70% of which was through loans offered to customers. Pandey said the bank has enough provision buffer with a coverage ratio of above 95% and has further added ₹200 crore to the provision kitty this quarter. Net non-performing assets (NPAs) during the quarter stood at 0.4% compared with 0.6% a year ago.