Union Bank's net flat on provisions, lower margins, up by 2%

MUMBAI: State-run Union Bank of India posted flattish growth in the fourth quarter of FY13 due to lower margins and higher provisions. Its net profit for the quarter ended March 31 rose 2% from a year ago to Rs 789 crore, and net interest margin fell to 2.8% from 3.2%. Net interest income, or the difference between interest earned and interest expended, during the quarter grew 8.7% to Rs 1,980 crore.

The bank's net non-performing loans dropped to 1.6% compared with 1.7% a year ago. Its restructured loans were worth Rs 1,400 crore during the quarter. Provisioning, however, rose 27% to Rs 656 crore mainly on account of the Reserve Bank of India's revised guidelines.

"We are trying to maintain our net interest margin at 3% and giving a guidance of 2.9% for the coming quarter," said D Sarkar, the bank's chairman and managing director.

The bank's advances for the full-year grew 15.7%, while deposit increased 17.8%. Sarkar said he expects advances to grow 15-16% and deposits by 13-14% this fiscal. Shares of UBI closed 1.42% higher on the Bombay Stock Exchange on Thursday. UBI, which has large accounts in the infrastructure sector, expects to restructure another Rs 2,200 crore of loans in the first quarter of the current fiscal.