Union bank

Union Bank of India’s fourth quarter results: the company reports an 8% rise in net profit and proposes a 19% dividend

Kolkata: The state-owned Union Bank of India reported an 8.3% year-on-year increase in net profit for the quarter ended March 31, supported by strong net interest income.

Net profit for the quarter stood at Rs 1,440 crore compared to Rs 1,330 crore a year ago.

Net interest margin (NIM), a key profitability ratio, improved 37 basis points to 2.75% in the reporting quarter. Net interest income increased by 25.3% to Rs 6,769 crore.

“We are trying to keep the NIM at around 3%,” chief executive Rajkiran Rai said.

The lender’s operating profit increased by 11.3% to Rs 5,530 crore. The total provision was 12.4% higher at Rs 4,081 crore.

Its asset quality improved, with the gross non-performing asset ratio falling to 11.11% at the end of March from 13.74% a year earlier. The net NPA ratio improved to 3.68% from 4.62%. The solvency ratio stands at 14.52%.

Advances from the bank increased by 9.6% year-on-year to Rs 7.16 lakh crore while deposits increased by 11.75% to Rs 10.3 lakh crore.

“Our goal is to increase advances by 10-12% this year,” Rai said. He said a rate hike of 50 to 100 basis points would not affect demand for long-term credit, although businesses may seek other sources of short-term loans.

The bank has an exposure of Rs 2700 crore to Future Group and Rs 2492 crore to Srei. Rai said the risks are covered by a 58% provision and an 86% provision respectively.

The board of the bank has recommended a dividend of Rs 1.90 per share of Rs 10 each for the last financial year.