Union Bank of India Q1 profit falls nearly 30%

Public sector lender Union Bank of India’s net profit for the first quarter ended June 2017 (Q1FY18) dipped by 30.1 per cent to Rs 116 crore on a sharp rise in provisions for bad loans and taxes.The Mumbai-based lender had posted a net profit of Rs 166 crore in April-June 2016 (Q1FY17).

Its asset quality came under pressure due to slippages in the first quarter of FY18. Sequentially Gross Non-performing Assets (GNPAs) rose by Rs 3,574 crore to Rs 37,286 crore (12.63 per cent) over level for Rs 33,712 crore (11.17 per cent) at end of March 2017. The gross NPA stood at Rs 27,280 crore (10.16 per cent) at end of June 2016.

The money set aside for bad loans also went up substantially (Rs 370 crore) in the quarter to Rs 1,875 from Rs 1,505 crore in January-March 2916.Its net interest income (NII), difference between interest earned and expenses, rose by 6.7 per cent in the reporting quarter to Rs 2,243 crore from Rs 2,102 crore in Q1Fy17, according to quarterly results filed with BSE.

The other income comprising treasury revenues, fees and commissions rose 36 per cent to Rs 1,414 crore from Rs 1,039 crore.

Its provisions for non-performing assets (NPAs) went up sharply by 39.3 per cent to Rs 1,875 crore in Q1FY18 from Rs 1,346 crore in April-June 2016. The Provision Coverage Ratio stood at 51.13 per cent at end of June 2017, up from 50 per cent in June 2016. The PCR was at 51.41 per cent at end of March 2016.

Its tax expenses more than doubled to Rs 236 crore in Q1FY18 from Rs 105 crore in the Q1Fy17.

The Capital Adequacy Ratio (CAR) was at 12.01 per cent with tier 1 of 9.24 per cent at end of Q1Fy18. Its CAR was 10.75 per cent with tier 1 of 8.39 per cent at end of June 2016.

Bank plans to equity capital upto Rs 2,000 crore in the current financial year. It could use combination of public offering, rights issue and institutional placement to raise equity capital.