Union Bank profit up 29% in fourth quarter

Public sector lender Union Bank of India reported a 29 per cent growth in net profit at Rs 773 crore in the January-March 2012 quarter compared with Rs 598 crore in the year-ago period.

Net profit for the full year ended March 31, 2012, however, declined by 14 per cent to Rs 1,787 crore (Rs 2,062 crore in FY11) due to increase in provisions towards non-performing assets (NPAs), restructured advances and depreciation on investments.

In the reporting quarter, net interest income (the difference between interest earned and interest paid) grew by 9 per cent to Rs 1,877 crore (Rs 1,717 crore). ‘Other income' rose by 26 per cent to Rs 755 crore against Rs 601 crore in the same period a year ago.

In FY12, deposits rose by 10 per cent to Rs 2,22,869 crore (Rs 2,02,461 crore as on March-end 2011) while advances were up by 18 per cent to Rs 1,81,031 crore (Rs 1,53,022 crore).

According to Mr D. Sarkar, Chairman and Managing Director, the bank is projecting a 17 per cent growth in deposits and 19 per cent growth in advances in FY13. NIMs are expected to be above 3 per cent.

Restructured advances

The bank's total restructured assets portfolio increased by Rs 6,263 crore in FY12 to Rs 11,879 crore. In the fourth quarter alone the restructured advances portfolio rose by Rs 3,236 crore.

“The assets are getting restructured on account of economic slowdown. We have restructured assets in sectors such as telecom, power, steel and commercial real estate,” said Mr Sarkar.

The Union Bank chief said he was hopeful that the restructured assets problem will be arrested in the current fiscal.

Year-on-year, gross NPAs increased by 50 per cent to Rs 5,450 crore (Rs 3,623 crore). Provisions towards non-performing assets jumped by 131 per cent to Rs 226 crore (Rs 98 crore in Q4 FY11).

Mr Sarkar said the bank will place emphasis on retained profits to boost its capital. The bank sought Rs 650 crore from the Government.

Union Bank has proposed to pay a dividend of Rs 8 per share on face value of Rs 10.

Shares of the bank ended down 4.04 per cent at Rs 202.90 on the Bombay Sock Exchange.

beena.parmar@thehindu.co.in