Union Bank of India Q4 result, reported huge loss

Government-owned Union Bank of India reported a loss of Rs 2,583.4 crore for the fourth quarter of FY18 due to near 275 percent jump in provisions for bad loans to Rs 5,639 crore.

In March quarter a year back, close to Rs 420-crore in tax write-back had helped the bank report a net profit at Rs 108.22 crore.

It had posted a net loss of Rs 1,250 crore in the December quarter due to a spike in bad loans and provisions towards accounts under insolvency. NII or net interest income (difference between interest earned and expended) fell 8 percent to Rs 2,193 crore from Rs 2,387 crore in the same quarter last year.

Gross non-performing asset (GNPA) rose to 15.73 percent from 11.17 percent in the same quarter last year. In the December quarter, it was at 13.03 percent. Net NPA for the quarter was 8.42 percent compared to 6.57 percent last year. In the December quarter, it was 6.96 percent.

Recoveries during the quarter reduced to Rs 387 crore from Rs 636 crore in the December quarter and Rs 533 crore in the year-ago quarter. A Reuters poll of equity analysts had estimated net loss of Rs 1,116.7 crore due to a jump in provisioning.

"Provisions on all the NCLT accounts have been made at 60 percent against a requirement of 40 percent requirement," said Rajkiran Rao, CEO and MD of Union Bank of India.

The provision coverage ratio (PCR) was at 57.16 percent compared to 51.41 percent a year ago.

Slippages for the quarter were Rs 10,043 crore. Over 50 percent of slippages were mainly due to the Reserve Bank of India's February 12 guidelines on new resolution framework, Rao said. About Rs 4,200 crore worth of accounts were under SDR and S4A (old resolution mechanisms) which have to be now classified as NPAs due to the RBI circular.

"We expect provisions to be around Rs 6,000 crore with an expectation of credit costs of 2 percent of total loans... that is at about normal levels," Rao added.