Union Bank of India Q1 net profit rises 32% YoY to Rs 1,558 crore

Eyes QIP for equity up to Rs 3,500 cr in Q3FY23

Public-sector lender Union Bank of India’s net profit grew 32 per cent year-on-year (YoY) to Rs 1,558 crore in the quarter ended June (Q1FY23) on the back of a rise in its net interest income (NII).

The Mumbai-based lender had posted a net profit of Rs 1,181 crore during the same period last year (Q1FY22).

Sequentially, its net profit rose 8.19 per cent from Rs 1,440 crore in Q4FY22.

The bank’s stock ended at Rs 37.10, down 2.24 per cent, on the BSE on Tuesday.

Its net interest income (NII) was up 8.11 per cent in Q1FY23 to Rs 7,582 crore from Rs 7,013 crore in Q1FY22. It increased 12 per cent sequentially from Rs 6,769 crore in the March 2022 quarter.

Its net interest margin (NIM) declined to 3 per cent in Q1FY23 from 3.08 per cent a year ago. However, it improved from 2.75 per cent in March 2022.

A Manimekhalai, managing director, said with the uptick in credit growth, the NIM was expected to improve to 3.1 per cent by March 2023.

Its non-interest income rose by just 1.36 per cent to Rs 2,817 crore in Q1FY23 from Rs 2,779 crore in Q1FY22.

It fell sequentially from Rs 3,243 crore in Q4FY22.

The asset quality profile improved with gross non-performing assets (GNPAs) declining at 10.22 per cent in June 2022 from 13.6 per cent in the year-ago quarter and 11.11 per cent in March 2022.

Net NPAs dipped to 3.31 per cent from 4.69 per cent a year ago and 3.68 per cent in March 2022.

The emphasis will be on recoveries (Rs 15,000 crore) and the bank is looking to reduce GNPAs below 9 per cent and net NPAs below 3 per cent by March 2023, she said.

The provision coverage ratio rose to 84.75 per cent for the quarter under review from 81.43 per cent a year ago and 83.61 per cent in March 2022.

The bank’s loan book grew 12.95 per cent YoY to Rs 7.28 trillion in June 2022 from Rs 6.45 trillion a year ago. Credit is expected to grow 12-13 per cent in FY23 with strong offtake from companies and the retail segment.

Deposits grew 9.27 per cent YoY to Rs 9.92 trillion in June 2022. The share of low-cost deposits -- current accounts and savings accounts (CASA) -- declined to 36.19 per cent in June 2022 from 36.39 per cent a year ago and 36.54 per cent in March 2022. The bank is looking to increase it to 37.8 per cent by March 2023.

The bank’s capital adequacy ratio (CAR) stood at 14.42 per cent in June 2022, up from 13.32 per cent in June 2021.

The bank is planning to raise up to Rs 3,500 crore of equity capital through qualified institutional placement (QIP) in the third quarter of FY23, subject to market conditions.