Union Bank of India

Asset quality stable, loan book and margin declines

Jun 09, 2021 05:06 IST capital market

Union bank of India reported the Net Profit of Rs 1329.77 crore for the merged entity (on merger of Andhra Bank and Corporation Bank) for the quarter ended March 2021 (Q4FY2021) against the comparable figure for merged entity representing net loss of Rs 7156 crore in Q4FY2020.

The merged entity has posted 9% decline in net interest income, while the non-interest income has moved up 23% in Q4FY2021 over comparable Q4FY2020 figures. The bank has witnessed decline in the net interest margin to 2.38% in Q4FY2021 on yoy basis. Within the non-interest income, the bank has posted decline in treasury income as well as core fee income in Q4FY2021.

The bank has witnessed decline in cost-to-income ratio to 48.0% in Q4FY2021 from 61.8% in Q4FY2020.

Asset quality stable: Bank maintained asset quality stable in the quarter ended March 2021.

Fresh slippages of advances increased to Rs 14688 crore in Q4FY2021 compared with Rs 332 crore in the previous quarter.

The recoveries and upgradations were Rs 2042 crore and write-off stood at Rs 10827 crore in Q4FY2021.

Outstanding standard restructured advances of the bank stood at Rs 9026 crore at end March 2021.

Stressed asset (NNPA and standard restructured advances) of the bank stood at 5.55% of advances at end March 2021 compared with 4.02% a quarter ago and 3.20% a year ago.

Risk weighted asset (RWA) of the bank increased 1% to Rs 551521 crore at end March 2021.

Asset Quality Indicators: Union Bank of India
Mar-21 Dec-20 Sep-20 Jun-20 Mar-20 Variation
QoQ YoY$
Gross NPA (Rs Crore) 89788.20 87968.62 95796.90 97189.95 49085.30 2
Net NPA (Rs Crore) 27280.52 19063.05 23894.35 28913.50 17303.14 43
% of GNPA 13.74 13.49 14.71 14.95 14.15 25
% of NNPA 4.62 3.27 4.13 4.97 5.49 135
% Provision coverage ratio 81.27 86.18 83.16 79.87 78.21 -491
% CRAR - Basel III 12.56 12.98 12.38 11.62 12.81 -42
% CRAR - Basel III - Tier I 10.35 10.47 10.05 9.48 9.74 -12

Variation in basis points for figures given in percentages and in % for figures in Rs crore
$ figures for merged entity not comparable with last years figure

 Business Highlights

Business growth improves, but loan book declines: Business of the bank increased at improved pace of 3% yoy to Rs 1577489 crore at end March 2021. Overseas business declined 25% to Rs 18190 crore, while domestic business moved up to 3% at Rs 1559299 crore at end March 2021.

Global advances declined 2% to Rs 653684 crore, while global deposits moved up 6% to Rs 923805 crore at end March 2021. The credit-deposit ratio of the bank dipped to 70.8% at end March 2021 from 73.9% a quarter ago and 76.7% a year ago.

Domestic advances declines: Domestic advances fell 1% to Rs 637672 crore at end March 2021. The MSME advance rose 1% yoy to Rs 122274 crore, while the agriculture advances galloped 22% to Rs 120124 crore and retail advances 10% to Rs 125427 crore at end March 2021. However, the corporate credit declined 14% yoy to Rs 269847 crore at end March 2021. The share of retail credit rose to 19.7% at end March 2021 from 17.6% at end March 2020.

CASA ratio improves: Domestic Deposits increased 7% to Rs 921627 crore, while the overseas deposit dipped 40% to Rs 2178 crore at end March 2021. CASA deposits increased 35% to Rs 399216 crore at end March 2021. CASA ratio stood at 43.2% at end March 2021 compared with 35.2% a quarter ago and 34.1% a year ago.

Investment book of the bank galloped 18% yoy to Rs 331551 crore at end March 2021. AFS book stood at Rs 84188 crore with a modified duration of 1.77 years.

NIM eases on sequential basis: Yield on funds declined 86 bps qoq to 5.75% in Q4FY2021, while the cost of funds fell 32 bps qoq to 3.74% in Q4FY2021. NIM of the bank stood at 2.38% in Q4FY2021, slightly lower than 2.89% in Q4FY2020.

Network expansion: Bank has reduced 278 branches raking the branch network to 9312 branches at end March 2021. ATMs count of the bank stood at 12957 ATMs at end March 2021.

Book Value per share stood at Rs 92.7 per share at end March 2021, while adjusted book value (net of NNPA and 25% of restructured advances) stood at Rs 37.1 per share at end March 2021.

Quarterly Performance:

NII declines on degrowth in loan book: Net Interest Income (NII) of the bank declined 9% to Rs 5402.86 crore in the quarter ended March 2021, as the loan book declined 2% and credit deposit ratio declined sharply. NIM of the bank also declined to 2.38% in Q4FY2021. Interest income of the bank declined 15% to Rs 15475.05 crore, while interest expenses dipped 18% to Rs 10072.19 crore in Q4FY2021.

Fee income declines, bad debt recovery spurts: The other income of the bank increased 23% to Rs 4550.94 crore in Q4FY2021, driven by 251% surge in the recoveries in written off accounts to Rs 1961 crore. However, the core fee income declined 2% to Rs 1522 crore, while profit on sale of investments also dipped 40% to Rs 874 crore in Q4FY2021 and exchange profit declined 53% to Rs 60 crore.

Net total income of the bank increased 3% to Rs 9953.80 crore in the quarter ended March 2021.

Expense ratio declines: The operating expense of the bank declined 20% to Rs 4773.93 crore. The expense ratio declined to 48.0% in Q4FY2021 from 61.8% in Q4FY2020.

Operating profit improved 40% to Rs 5179.87 crore in Q4FY2021.

Provisions declines: Provision and contingencies declined 59% to Rs 3904.28 crore in the quarter under review. The NPA provisions dipped 45% to Rs 4712 crore, while the investment provisions jumped 89% to Rs 539 crore in Q4FY2021. The bank has written back provisions for standard advances worth Rs 1393 crore in Q4FY2021.

The profit before tax for the bank jumped to Rs 1275.59 crore in Q4FY2021.

The bank has written back tax provisions of Rs 54 crore, helping to raise net profit to Rs 1329.77 crore for quarter ended March 2021.

Financial Performance FY2021:

For the year ended March 2021 (FY2021), the bank posted net profit of Rs 2905.97 crore. The net interest income rose to Rs 24688.43 crore, while non-interest income increased to Rs 11336.85 crore in FY2021. The expense ratio stood at 46.5% in FY2021. The operating expenses increased to Rs 16765.99 crore, while provision and contingencies stood at Rs 16859.87 crore. The profit before tax came in at Rs 2399.42 crore in FY2021. With the tax write backs, the net profit rose to Rs 2905.97 crore in FY2021.

Union Bank of India: Results

 

Union Bank of India: Results
Particulars 2103 (3) 2003 (3) Var %$ 2103 (12) 2003 (12) Var %$
Interest Earned 15475.05 9289.41 68767.34 37231.12
Interest Expended 10072.19 6411.30 44078.91 25794.37
Net Interest Income 5402.86 2878.11 24688.43 11436.75
Other Income 4550.94 2017.58 11336.85 5260.79
Net Total Income 9953.80 4895.69 36025.28 16697.54
Operating Expenses 4773.93 2243.05 16765.99 7516.42
Operating Profits 5179.87 2652.64 19259.29 9181.12
Provisions & Contingencies 3904.28 3501.69 16859.87 10698.77
PBT before EO 1275.59 -849.05 2399.42 -1517.65
EO 0.00 -2509.98 0.00 -2509.98
PBT after EO 1275.59 -3359.03 2399.42 -4027.63
Provision for Tax -54.18 -855.85 -506.55 -1129.85
PAT 1329.77 -2503.18 2905.97 -2897.78
EPS*(Rs) 7.78 -3.70 4.25 -1.60
* Annualized on current equity of Rs 6834.75 crore excluding EO and relevant tax. Face Value: Rs 10 per share, Figures in Rs crore
$ figures for merged entity not comparable with last years figure
Source: Capitaline Corporate Database

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