Union Bank of India posts standalone net profit at Rs139.30cr in Q2FY19, vs. net loss of Rs1,530.72cr yoy: In-line with Estimates

The bank’s standalone NII stood at Rs2,493cr, up 7.42% yoy but down 5.07% qoq.

Oct 31, 2018 08:10 IST India Infoline Research Team

Union Bank of India Q2FY19

Standalone Results Q2FY19: ( cr)

Q2FY19 YoY (%)
NII 2,493 7.4
GNPA (%) 15.7 339
Provisions 1,655.55 [53.4]
Net Profit (adjusted) 139.30 -
***GNPA change is bps
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).
  • Slippages composition – Agri - Rs784cr , retail – Rs214cr , SME – Rs449cr , corporate – Rs1,220cr.
  • 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.

Technical View:

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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