Impacted by higher provision towards bad loans, Union Bank of India’s net profit dipped by 13.2 per cent at Rs. 302 crore for the quarter ended December 31, 2013 compared to Rs. 348 crore in the corresponding period of previous year.
The loan loss provision for the third quarter of current fiscal was at Rs 674 crore compared to Rs. 497 crore in the corresponding period of previous year. Further, the provision towards restructured loans increased to Rs. 106 crore (Rs. 33 crore).
It reported an incremental increase in bad loans portfolio at Rs. 1738 crore compared to Rs. 1968 crore in the preceding quarter. An account in the construction sector and another in the sugar sector accounted a chunk of the increase in bad loans in the quarter, the Bank said.
Gross non-performing assets (as a percentage of total loans) rose to 5.08 per cent from 3.85 per cent as at December-end 2013.
NII, Net interest income (the difference between interest earned and expended) of the Bank was up by 8 per cent to Rs 2120 crore for the quarter ended December 31, 2013 compared to Rs 1963 crore in the corresponding period of previous fiscal. Net interest margin (NII/ average assets), however, was flat at 2.50 per cent.
Profit on sale of investment was at Rs 252 crore (Rs 70 crore) increased the non-interest income of the Bank, which rose 29 per cent to Rs 877 crore for the quarter under review compared to Rs 680 crore in the corresponding period of previous year.
The Bank has put in place a strategy to improve operational efficiency so that capital can be conserved, said Arun Tiwari Chairman and Managing Director, Union Bank of India here while addressing a press conference. However, he said that the Bank does not have control on the external economic environment, which is challenging.
He also said that the Bank will continue to hold on to the deposit and loan growth targets of 9-10 per cent and 10-11 per cent, respectively, as planned beginning of the financial year.
Mr. Tiwari also said that the bank has shrunk high cost deposits, and as at December-end these deposits constituted 8.5 per cent of total deposits compared to 10.14 per cent as at September-end. The Bank also stepped up focus on retail, agriculture and micro, small and medium enterprise loans as these loans carry relatively lower risk weights.
