More Stories

Informist, Tuesday, Jul 16, 2024

By Richard Fargose

MUMBAI – Union Bank of India's net profit for Apr-Jun is seen rising 12.7% on year to 36.48 bln rupees on the back of steady growth in its loan book and a likely fall in provisions, according to the average of estimates from five brokerages. Sequentially, the net profit is seen rising 10.2%.

The brokerages’ estimates for the bank's net profit are in the range of 34.13-40.70 bln rupees. Union Bank of India is scheduled to announce its earnings for the June quarter on Friday.

In Jan-Mar, the bank's provisions more than halved to 12.6 bln rupees from 29.36 bln rupees a year ago. The bank also registered further improvement in asset quality in the March quarter. Its gross non-performing assets ratio fell to 4.76% from 4.83% a quarter ago. The bank aims to bring its gross non-performing assets ratio below 4% in 2024-25 (Apr-Mar).

Emkay Global Financial Services Ltd said slippages could rise in Apr-Jun as Union Bank of India remains highly vulnerable to loan waivers in Telangana. Last month, the Telangana Cabinet approved the waiver of farm loans up to 200,000 rupees. The waiver will cost the state exchequer around 310 bln rupees.

While the cost of loan waivers is borne by the government, they also lead to a surge in slippages as borrowers default strategically in anticipation of the waivers. Fresh slippages of the bank were at 32.02 bln rupees in Jan-Mar, up from 24.01 bln rupees in Oct-Dec.

As per the provisional figures released by the bank, global gross advances rose 11.5% on year to 9.12 trln rupees as of Jun 30. Global advances rose 0.8% on a sequential basis. The bank's total deposits grew 8.5% on year to 12.24 trln rupees as of Jun 30, rising 0.2% sequentially.

Current account savings account deposits rose only 3.8% on year to 3.99 trln rupees as of Jun 30. Sequentially, the domestic current account savings account deposits fell 2.6%.

Union Bank's net interest margin is expected to moderate 5-15 basis points during Apr-Jun owing to a fall in low-cost current account savings account deposits. Most analysts expect the bank’s cost of funds to rise further due to seasonality and tighter liquidity.

For Jan-Mar, the bank's net interest margin was 3.09%, against 3.08% in Oct-Dec and 2.98% a year ago. The bank hopes to keep the net interest margin at 2.8-3.0% in 2024-25.

The bank's net interest income for Apr-Jun is seen rising 6.8% on year to 94.44 bln rupees, as per the average of estimates from five brokerages. Today, shares of the bank closed 0.3% higher at 139.65 rupees on the National Stock Exchange.

Following are the Apr-Jun earnings estimates for Union Bank of India, in million rupees, based on reports from five brokerages:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Rajeev Pai

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.