Union Bank of India on Saturday reported 80.57% jump in March quarter net profit to ₹2,811 crore helped by a huge jump in recoveries from written-off accounts.
The State-owned lender's net profit in entire 2022-23 was ₹8,512 crore against ₹5,265 crore a year ago.
In March quarter, its core net interest income increased 21.88% to ₹8,251 crore on the back of a 13% growth in advances and widening of net interest margin to 2.98% from 2.75% in the year-ago period.
Non-interest income grew 62.48% to ₹5,269 crore in January-March 2023, helped by handsome performance on the recoveries front.
Recoveries from accounts written off in the past zoomed to ₹2,954 crore from ₹294 crore in the year-ago period, providing a boost to the bottomline.
Managing Director and chief executive A. Manimekhalai said the bank started FY23 with a recovery target of ₹15,000 crore, but exceeded its own expectations by recovering over ₹20,000 crore of advances.
On the advances side, she said the bank is aiming for an overall loan book growth of 10-12% in FY24, and added that it sees a healthy demand on the corporate advances front where the loan pipeline is over ₹35,000 crore.
Hybrid annuity model-based road projects, renewables, steel and cement sectors are among those having the most healthy loan demand among the corporates, she said, adding that in FY23, the overall corporate loanbook grew 11%.
The bank's fresh slippages reduced to ₹2,687 crore during the quarter under review, and the gross non performing assets ratio improved to 7.53% as against 11.11% in the year-ago period and 7.93% at the end of December 2022.
It set aside ₹2,935 crore as provisions for the quarter as against ₹3,618 crore in the year-ago period, which also helped the profit growth.
The bank's overall capital adequacy stood at 16.04% with the core tier-I buffers at 12.36% as of March 31, 2023.
Ms. Manimekhalai said the bank's board has approved a ₹10,000 crore capital raising plan, which will include ₹8,000 crore of fresh equity capital to bolster the core buffer, ₹1,000 crore of additional tier-I capital and ₹1,000 crore in tier-II capital.
The bank will decide on the capital raising route and the timing based on the market conditions, she said, adding that the capital raise will also help bring down the state holding in the lender to under 75% mandated by markets regulator SEBI by August 2024. At present, Government of India holds over 83% in UBI.
She also said the National Asset Reconstruction Company has so far identified 42 accounts totalling dud assets of ₹1.62 lakh crore. UBI has exposures in 24 of the identified accounts, she added.