United Bank of India Q4 net down 78% at Rs 104.8 crore

KOLKATA: A near 10% rise in provisions to cover bad loans and taxes has pulled down United Bank of India's net profit by 78% at Rs 104.8 crore for the quarter to March 2015.

P Srinivas, UBI's managing director & chief executive said the management has preferred to provide more to consolidate the bank's balance sheet after five quarters of turmoil.

"There is a need to strengthen the balance sheet of UBI," Srinivas said after announcing the fourth quarter results.

The bank did not recommend any dividend for shareholders. The government hold 82% in the bank.

It has almost become a convention by banks to set aside more funds towards bad loans and other contingencies and take a knock on net profit when a new chief takes charge so that the lenders can show better results towards the end of the tenure of the incumbent.

Srinivas took charge on December 31, 2014 and this was his first full-fledged quarterly results.

UBI's operating profit however rose 46% at Rs 791.9 crore as the bank grew other income by 86% to Rs 581.3 crore riding on high treasury gains.

The lender has managed to better its asset quality with a slender 1.6% rise in advances portfolio to Rs 69070 crore after Reserve Bank of India removed the lending ban on it. UBI's gross non performing assets ratio improved to 9.49% as on March 2015 from 12.03% on December 2014 and from 10.47% a year back. Net NPA stood at 6.22% as compared with 8.50% a quarter back and 7.18% a year back.

Yet, the bank provided Rs 120 crore to cover credit risk in the quarter under review while there was Rs 35 crore right back in the corresponding quarter last year. Its other income rose to Rs 1747 crore compared with Rs 1207 crore. The bank's capital adequacy ratio was at 10.75% which Srinivas said would be enough to lend another 6000-7000 crore this year.