Union Bank Q3 net up 106.8 % at Rs 2,245 cr, considers QIP for equity

State-owned lender's loan book grows 20.09% YoY to Rs 8.04 trn, asset quality improves

Union Bank of India’s net profit rose 106.8 per cent year-on-year (YoY) to Rs 2,245 crore in the quarter-ended December (Q3 FY23) on the back of improved net interest margin (NIM).

The Mumbai-based public sector lender made a net profit of Rs 1,085 crore in Q3 of FY22. Net profit was higher in Q3 FY23 compared to Q2 FY23 when it was Rs 1,848 crore.

The bank’s stock was trading 0.37 per cent higher at Rs 81.9 per share on the BSE on Friday. Total capital adequacy ratio (CAR) stood at 14.45 per cent in December 2022. The bank is considering Qualified Institutional Placement (QIP) for raising equity capital of about Rs 3,800 crore in the current quarter ending March 2023, subject to market conditions. This could reduce the government’s stake in Union Bank to 79 per cent, said A Manimekhalai, the lender’s managing director and chief executive officer (CEO).

Union Bank's net interest income (NII) was up 20.26 per cent YoY in Q3 to Rs 8,628 crore. Sequentially, NII rose from Rs 8,305 crore in Q2Fy23.

NIM improved to 3.21 per cent in Q3 from 3.0 per cent in Q3 FY22. Sequentially, NIM rose from 3.15 per cent in Q2Fy23. Bank expects to maintain guidance of 3 per cent for Fy23, said Manimekhalai.

Non-interest income rose 29.58 per cent YoY to Rs 3,271 crore during the quarter under review. Sequentially, it declined marginally from Rs 3,276 crore during the quarter ended September 2022. Treasury income was impacted but there were no mark-to-market losses, she said.

Asset quality improved with gross non-performing assets (GNPAs) at 7.93 per cent in December 2022, compared with 11.62 per cent a year ago. Sequentially, GNPAs were down from 8.45 per cent in September 2022.

Net NPAs dipped to 2.14 per cent from 4.09 per cent a year ago. Sequentially, they improved from 2.64 per cent in July-September 2022.

The bank’s guidance says it aims to reduce Gross NPAs below 9 per cent by March 2023, but the actual level would be much lower.

The provision coverage ratio (PCR) rose to 88.5 per cent for the quarter under review from 82.8 per cent a year ago. Sequentially, it improved from 86.61 per cent in July-September 2022.

On the business expansion front, the bank’s loan book grew by 20.09 per cent YoY to Rs 8.04 trillion for the third quarter ended December 2022.

Deposits grew 13.61 per cent YoY to Rs 10.65 trillion in October-December 2022. The share of low-cost money, current account and savings account (CASA) deposits, declined to 35.3 per cent at end of December 2022 from 36.99 per cent in July-September 2022 and 35.63 per cent a year ago.

The bank has guided for credit growth of 10-12 per cent and deposit of 10 per cent in FY23. While there is gap in growth rates of advances and deposits, it has adequate liquidity like excess bonds portfolio of Rs 50,000 crore which could monetised to support credit demand, Manimekhalai said.