Public-sector lender Union Bank of India reported a 23.48 percent drop in net profit at Rs 443 crore in the March quarter impacted by an increase in tax outgo and higher provisioning for bad loans.
The bank had clocked a net profit of Rs 578.91 crore in the January-March quarter of 2013-14 financial year. "Dip in profit was on account of additional taxation due to increase in operating profit. There was also higher provisioning on NPAs," chairman and managing director Arun Tiwari told reporters here. Operating profit improved 25.2 percent to Rs 1,652 crore from Rs 1,320 crore in the year-ago period. Its taxation provisions rose to Rs 199 crore in the fourth quarter.
In FY14, it had reversal of Rs 180 due to excess tax provision, while its NPA provisions rose to Rs 833 crore compared to Rs 670 crore last year, taking the total provisions to Rs 1,209 crore up from Rs 741 crore.
Despite drop in net profit, the bank's share price rose 2.3 percent today, as its asset quality improved sequentially. This came on a day when the main index tanked 2.3 percent or 630 points spooked by delays in Parliament passing the new land Bill and GST Bill.
Domestic net interest margin came down to 2.46 percent from 2.62 percent , while global NIM also inched down to 2.37 percent from 2.55 percent. Tiwari said the bank is looking at a NIM of 2.6-2.7 percent this fiscal. Although the asset quality deteriorated in the quarter, and year-on-year, sequentially there was some improvement.
Gross non-performing assets improved to 4.96 percent from 5.08 percent in the third quarter and to 4.08 percent in the fourth quarter of FY14. Net NPAs too improved to 2.71 percent in the period from 2.95 percent in the third quarter, while it was 2.33 percent in year-ago period.
The bank made a massive improvement in recoveries which jumped manifold to Rs 550 crore from Rs 141 crore, whiles upgrades soared to Rs 317 crore from Rs 48 crore.
The bank wrote-off Rs 245 crore of loans in the period compared to Rs 222 crore. The bank restructured Rs 2,366 crore worth of loans in the reporting period, which included one large infra account of Rs 850 crore. Its business rose 9 percent to Rs 5,79,627 crore.
While domestic deposits rose 6.6 percent to Rs 2,92,812 crore, advances increased 11.3 percent to Rs 2,16,751 crore. The bank is targeting a loan growth of 10-11 percent and deposit growth of 7 percent in FY16.
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