Rise in provisions drags Union Bank's Q3 profit

Union Bank of India reported a sharp 66 per cent decline in net profit to Rs 197 crore in the October-December 2011 period, against Rs 579 crore in the corresponding period last year.

Increase in provisions towards non-performing assets, restructured advances and depreciation on investments weighed down the bank's profitability.

During the reporting three months, gross NPAs increased by Rs 72.53 crore to Rs 5,209 crore. In the nine months period, gross NPAs increased by Rs 1,586 crore.

In the reporting period, provisions towards NPAs and standard assets increased to Rs 425 crore (Rs 361 crore) and Rs 100 crore (Rs 35 crore), respectively.

Provision towards ‘others', including standard derivative exposures, and depreciation in investments were also higher at Rs 375 crore (against write-back of Rs 3 crore) and Rs 73 crore (Rs 6 crore) respectively.

Due to rise in NPAs, the provision coverage ratio of the bank came down to 63 per cent as of December-end 2011, against 70 per cent as of December-end 2010.

The bank's scrip closed 2.87 per cent down at Rs 206.75 a share on the BSE, against the previous close of Rs 212.85.

kram@thehindu.co.in