Union Bank of India

Asset quality continues under pressure

Nov 15, 2019 02:11 IST capital market

Union bank of India reported net loss of Rs 1193.61 crore in the quarter ended September 2019 (Q2FY2020). The bank has posted healthy 17% growth in the net interest income, while non-interest income surged 27% in Q2FY2020. The bank has also showed improvement in cost-to-income ratio helping to post 22% surge in the operating profit for Q2FY2020. However, the provisions more than doubled, pushing the bank into losses for Q2FY2020.

The bank has posted 7% growth in its global business mainly driven by 11% surge in the deposits. The bank has improved margin to 2.35% in Q2FY2020 from 2.12% in the previous quarter and 2.18% in the corresponding quarter of the last year. The CASA deposits ratio eased to 33.8% end September 2019.

The bank has witnessed deterioration in asset quality with elevated slippages of loans in Q2FY2020.

Asset quality remains under pressure: Bank continued to witness pressure on asset quality with the higher fresh slippages of advances.

  • Fresh slippages of advances remained jumped to Rs 4219 crore in Q2FY2020 from Rs 3090 crore in Q1FY2020 and Rs 2667 crore in Q2FY2019.
  • The recoveries and upgradations were Rs 1303 crore and write-off stood at Rs 1878 crore in Q2FY2020.
  • Outstanding standard restructured advances of the bank eased to 0.50% of loan book end September 2019 from 0.52% end June 2019.
  • Risk weighted asset (RWA) of the bank increased 5% to Rs 291613 crore at end September 2019.
Asset Quality Indicators: Union Bank of India
Sep-19 Jun-19 Mar-19 Dec-18 Sep-18 Variation
QoQ YTD YoY
Gross NPA (Rs Crore) 49850.48 48811.88 48729.15 49713.34 50157.42 2 2 -1
Net NPA (Rs Crore) 20791.06 21230.89 20332.42 24141.64 24656.94 -2 2 -16
% of GNPA 15.24 15.18 14.98 15.66 15.74 6 26 -50
% of NNPA 6.98 7.23 6.85 8.27 8.42 -25 13 -144
% Provision coverage ratio 67.75 65.88 66.24 58.84 57.66 187 151 1009
% CRAR - Basel III 15.14 11.43 11.78 11.43 11.55 371 336 359
% CRAR - Basel III - Tier I 12.83 9.27 9.48 9.02 9.02 356 335 381
Variation in basis points for figures given in percentages and in % for figures in Rs crore

Business Highlights

Business growth improves: Global Business grew by 7% to Rs 769936 crore end September 2019 from Rs 717656 crore end September 2018. Domestic business grew 7% to Rs 748893 crore from Rs 698892 crore.

Total deposit of the bank grew 11.0% to Rs 442879 crore from Rs 399092 crore. The Banks Global Advances grew by 3% to Rs 327057 crore from Rs 318563 crore.

Retail loans driving overall credit growth: Domestic Advances increased 2.5% to Rs 309449 crore from Rs 302007 crore, driven by 16% growth in retail advances grew by 15.7% to Rs 59335 crore end September from Rs 51270 crore end September 2018.

CASA ratio eases: CASA deposits increased 6% to Rs 149833 crore at end September 2019. CASA ratio eased to 33.8% at end September 2019 compared with 34.3% a quarter ago and 35.3% a year ago. Average CASA deposits ratio stood at 34. % at end September 2019 compared with 34.4% a quarter ago and 34.1% a year ago.

Investment book of the bank increased to Rs 170781 crore at end September 2019. AFS book stood at Rs 59445 crore with a modified duration of 2.74 years.

NIM improves: Yield on funds improved qoq to 6.89% in Q2FY2020, while the cost of funds dipped 17 bps qoq to 4.76% in Q2FY2020. NIM of the bank improved to 2.35% in Q2FY2020.

Network expansion: Bank has network of 4284 branches and 6798 ATMs at end September 2019.

Book Value per share stood at Rs 132.1 per share at end September 2019, while adjusted book value (net of NNPA) stood at Rs 14.1 per share at end September 2019.

Financial Performance H1FY2020

Net Interest Income for H1FY2020 increased by 6% to Rs 5425 crore from Rs 5120 crore in H1FY2019. Non Interest Income for H1FY2020 increased by 1% to Rs 2132 crore from Rs 2107 crore in H1FY2019. Net loss for H1FY2020 stood at Rs 969 crore on account of higher provisioning. Yield on advances improved to 7.85% for H1FY2020 as against 7.80% for H1FY2019. Cost of funds stood at 4.86% for H1FY2020 as against 4.84% for H1FY2019. Return on average assets (annualised) stood at -0.37% for H1FY2020. Return on equity (annualised) stood at (-) 6.72% in H1FY2020.

Union Bank of India: Financial Results

 

Particulars 1909 (3) 1809 (3) Var % 1909 (6) 1809 (6) Var % 1903 (12) 1803 (12) Var %
Interest Earned 9413.37 8538.82 10 18310.99 17239.63 6 34066.66 32748.00 4
Interest Expended 6507.51 6045.70 8 12886.94 12120.39 6 23851.75 23443.34 2
Net Interest Income 2905.86 2493.12 17 5424.05 5119.24 6 10214.91 9304.66 10
Other Income 1143.20 899.44 27 2132.72 2107.39 1 4473.95 4989.86 -10
Net Total Income 4049.06 3392.56 19 7556.77 7226.63 5 14688.86 14294.52 3
Operating Expenses 1808.43 1560.68 16 3429.73 3245.97 6 7167.63 6654.95 8
Operating Profits 2240.63 1831.88 22 4127.04 3980.66 4 7521.23 7639.57 -2
Provisions & Contingencies 3858.75 1715.55 125 5378.09 4004.62 34 11447.89 14280.70 -20
Profit Before Tax -1618.12 116.33 PL -1251.05 -23.96 - -3926.66 -6641.13 -
Provision for Tax -424.51 -22.70 - -281.87 -292.53 - -979.21 -1393.76 -
PAT -1193.61 139.03 PL -969.18 268.57 - -2947.45 -5247.37 -
EPS*(Rs) -27.08 3.15 -10.99 3.05 -16.72 -29.76
* Annualized on current equity of Rs 1763.02 crore. Face Value: Rs 10 per share, Figures in Rs crore, LP: Loss to profit, PL: Profit to Loss
Source: Capitaline Corporate Database

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