Union Bank of India's Q2FY19 revenue came in flat qoq to Rs9,438cr. Its NII came at Rs2,493cr, which has increased by 7.4% yoy. The bank, for Q2FY19, has reported net profit of Rs139.3cr, in-line with consensus estimates as against loss of Rs1,530.7cr yoy. The net profit was in-line with consensus estimates due to higher NII. Its GNPA for Q2FY19 stood at 15.74% against 16% qoq, which has declined by 26bps. NNPA for the quarter came at 8.42% against 8.71% qoq, which has decreased by 29bps.
Slippages for the quarter were lowest in the last 12 quarters.
Slippages during the quarter was Rs,2670cr, with >45% of the slippages coming from large corporate (driven by construction, EPC and real estate).
NIMs and PCR for Q2FY19 stood at 2.18% and 57.66%, respectively.
The Bank’s global advances grew by 2.8% yoy to Rs3.18 lakh cr.
Domestic gross advances grew by 9% yoy to Rs2.77 lakh cr.
Yield on funds improved to 6.88% for Q2FY19 as against 6.81% yoy.
Cost of funds stood at 4.87% for Q2FY19 as against 4.81% yoy.
Cost-to-income ratio stood at 47.77% for Q2FY19 as against 45.52% yoy.
Cash Recovery & Upgradation during Q2FY19 increased by 180.4% to Rs1,615cr as against Rs576cr yoy.
Capital Adequacy ratio of the Bank under Basel III is 11.55% as on September 30, 2018.
Management Guidance-Credit growth in the region of 7-8% and deposits growth 8-10%, CASA to remain in the range of 34-35%, NIM – 2.25%, delinquencies at 3. 5% and credit cost at 2.25%, GNPA should be lower than 12% with NNPA <6%
Increase in restructured book was due to Kerala floods.
Already had portfolio buy out of Rs2,500cr from NBFCs, and bank expects to buyout further in the range of Rs5,000cr.
Bank expects recoveries from NCLT– Rs35-4000cr in H2FY19E. Expect write-back in Essar and Uttam Galva (exposure of Rs444cr).
Exposure to real estate – Rs6,700cr, this comprises of 40% of LRD portfolio and does not expect any major pain on this portfolio
Sold 2 accounts to ARCs totaling Rs400cr . Have proposed to sell further Rs650cr during the quarter.
Union Bank of India is currently trading at Rs. 69.75, up by 7.55 points or 12.14% from its previous closing of Rs. 62.20 on the BSE.
The scrip opened at Rs. 63 and has touched a high and low of Rs. 70.25 and Rs. 62.20 respectively. So far 2,19,07,964 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 200 DMA.
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