Synopsis: Union Bank of India recorded significant growth in its consolidated net profit for the March quarter, propelled by lower provisions and an increase in core net interest income.
State-owned Union Bank of India disclosed a notable 18.36% increase in its consolidated net profit for the March quarter, reaching Rs 3,328 crore, supported by reduced provisions.
For the fiscal year 2023-24, the bank reported a consolidated net profit of Rs 13,797 crore compared to Rs 8,512 crore in the previous year.
Standalone net profit for the quarter rose to Rs 3,311 crore from Rs 2,782 crore a year earlier.
Core net interest income saw a robust growth of 14.38% to Rs 9,437 crore, driven by an 11.7% expansion in advances and an increase in net interest margin to 3.10% from 2.97% year-on-year.
The bank's managing director and chief executive, A. Manimekhalai, outlined targets for the fiscal year 2024-25, aiming for credit growth between 11-13% and deposit growth ranging from 9-11%.
However, a decline in net interest margins to 2.8-3% is expected, with plans for periodic review.
Non-interest income experienced a decline of over 10% to Rs 4,707 crore, mainly due to reduced recoveries from written-off accounts.
The bank targets overall recoveries of Rs 16,000 crore for FY25, down from over Rs 18,000 crore in FY24.
Provisions decreased to Rs 3,222 crore from Rs 4,041 crore in the prior year, while fresh slippages increased to Rs 3,202 crore.
Despite this, the bank's gross NPA ratio declined to 4.76% from 7.53% in the previous year, with plans to further reduce it to under 4% by the end of FY25.
Regarding the RBI's new proposals on project finance, Manimekhalai expressed confidence in managing the impact, noting that the bank's corporate loan book includes 28% in project finance loans, with a majority allocated to completed projects.
Additionally, the bank holds a robust pipeline of over Rs 40,000 crore to support credit growth.
On the technological front, the bank is currently revamping its mobile app and anticipates no significant challenges.
With an overall capital adequacy of 16.97%, the bank foresees no need for new fund infusion unless substantial private capex improvement occurs.
Plans are underway to open 250-300 branches in FY25.
In conclusion, Union Bank of India reported a notable increase in its consolidated net profit for the March quarter, driven by reduced provisions and growth in core net interest income.
Despite a decline in non-interest income, the bank remains focused on achieving its targets for credit and deposit growth in the fiscal year 2024-25.
Efforts to manage NPAs and navigate regulatory changes, particularly in project finance, are underway, supported by a robust capital adequacy ratio.
With plans for branch expansion and technological enhancements, the bank aims to sustain its growth trajectory while maintaining financial resilience.
Related Questions
1. What was the percentage increase in Union Bank of India's consolidated net profit for the March quarter?
Union Bank of India disclosed an 18.36% increase in its consolidated net profit for the March quarter.
2. What were the targets outlined by Union Bank's managing director for the fiscal year 2024-25?
Union Bank aims for credit growth between 11-13% and deposit growth ranging from 9-11% in the fiscal year 2024-25.
3. What was the reason behind the decline in non-interest income for Union Bank?
Non-interest income declined over 10% mainly due to reduced recoveries from written-off accounts.
4. What is the bank's target for overall recoveries in FY25?
The bank targets overall recoveries of Rs 16,000 crore for FY25.
5. How much did the bank's provisions decrease from the previous year?
Provisions decreased to Rs 3,222 crore from Rs 4,041 crore in the prior year.
