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Saturday, October 27, 2012

United Bank net rises 16% on treasury gains

Backed by growth in other income, United Bank of India posted 16 per cent rise in net profit at Rs 145 crore for the quarter ended September 30.

Other income grew 49 per cent. However, the bank’s net interest income dipped three per cent.

Sequentially, however, profits dipped about 17 per cent from Rs 174 crore in the first quarter ended June 30.

According to Bhaskar Sen, Chairman and Managing Director, the drop in net interest income was on account of a slowdown in credit offtake.

“The growth in net profit came from a higher other income, primarily treasury. We took a conscious decision of going slow on the credit front,” Sen told Business Line.

The slowdown in credit offtake also impacted the bank’s profitability. Net interest margin (NIM) was down to 2.7 per cent during the period under review compared with 3.16 per cent during the corresponding quarter last year.

The bank is however, hopeful of achieving NIM of three per cent by the end of this fiscal.

“We expect credit growth to pick up. We have already started getting some good loan proposals. Moreover, we are also looking at reducing our deposit rates to bring down the cost of funds. Supported by these measures, we expect our NIM to improve,” Sen said.

Gross non-performing assets increased to 3.88 per cent (3.48 per cent), even while net NPAs declined to 1.95 per cent (2.21 per cent).

United Bank has submitted a proposal pertaining to capital requirement to the Union Government. “It is under consideration and we hope to get the funds by the end of this fiscal,” he said refusing to divulge details of the amount sought.

The fund infusion would help boost capital adequacy ratio, which currently stands at 12.08 per cent, he added.

On Friday, shares of United Bank closed at Rs 64.95, down 2.26 per cent, on the BSE.


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