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Union Bank of India: Net Profit Drops 12.6% as Provisions Rise

Union Bank of India secured a 333 crore INR net profit in this quarter against the previous year's 381 crore INR for the same
Union Bank of India secured a 333 crore INR net profit in this quarter against the previous year’s 381 crore INR for the same period.

Union Bank of India stated that its quarterly net profit dropped 12.6% because of the low income and higher provisions. The Bank provided numbers comparing with Andhra Bank and Corporation Bank when they were separate entities. The Union Bank showed the numbers on its investor presentation. These three banks, Union Bank of India, Andhra Bank, and Corporation Bank, merged on April 1st. The June quarter reflects the financials of the integrated entity (1).

The 333 core INR of the Bank’s net profit is for the three months that ended on June 30th. The gain is less compared to 381 crore INR of the previous year in the same period.

Union Bank Provisions and Income

The provisions of the Bank increase 4.6%, from 3,538 crore INR to 3,701 crore INR compared to the previous year. During the first quarter, the integrated Bank had put 10,847 crore INR in provisions.

The net interest income of Union Bank, the difference between interest earned and paid (in loans and deposits) grew by 17.1%. The Union Bank reported a net interest income of 6,403 crore INR compared to 5,468 crore INR in the same period last year.

The other income of Bank also fell by 22.9%. In this quarter, the three months to June, the Bank received 1,468 crore INR compared to 1,897 crores INR in the corresponding period the previous year.

Notably, the gross non-performing assets of the Bank were at 14.95% in the June quarter. The percentage was 14.59% in the March quarter of the financial year 2020 and 15.59% in the previous year.

The Bank’s net NPA ratio was at 4.97% in the current quarter compared to 5.22% in the first quarter and 6.47% in the same period in the previous year. On Friday, Bank’s shares increased to 1.84% and closed at 30.45 INR on the BSE. The Sensex closed at 38,434.72 points and gained 0.56%.