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Informist, Friday, May 9, 2025

 

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--Union Bank: Hard to give FY26 outlook as operating environment uncertain 
--Union Bank: No guidance on recovery due to uncertain macro econ conditions
--Union Bank: Rise in MSME, agri slippages won't continue in Apr-Jun 
--CONTEXT: Comments by Union Bank's mgmt in post-earnings analyst call 
--Union Bank: See our growth aligning with GDP growth in FY26 

 

By Vaishali Tyagi and Vidhushi RajPurohit

 

MUMBAI – The management of Union Bank of India expects slippages in micro, small, and medium enterprises and agricultural advances to fall in the June quarter. During the March quarter, most of its slippages had come from MSME and agriculture segments, the bank said. The bank reported total slippages worth INR 25.67 billion in Jan-Mar, sharply higher than INR 19.69 billion in the corresponding quarter a year ago. For the year ended March, the lender's total slipppages stood at INR 120.73 billion. 

 

"So, the higher slippages were in the MSME and agricultural loans side, and we had a large number of restructured accounts in agriculture that contributed to the slippages this quarter," the bank's management said in a conference call with analysts Friday. "We have taken a call on this and we don't expect this trend to continue in the coming quarter." Agricultural loans accounted for 37.9% of the total slippages, while MSME loans made up 37.4%, highlighting the significant contribution of these sectors to the bank's slippages, according to an investor presentation by the bank.

 

The bank will pay a final dividend of INR 4.75 per share for 2024-25 (Apr-Mar). At 1419 IST, shares of the bank traded 5.5% higher at INR 123.20 on the National Stock Exchange. The bank announced its earnings after market hours Thursday.

 

Union Bank of India's management expressed caution regarding the bank's future outlook due to uncertainty in the operating environment. The bank's net profit jumped 50.6% on-year to INR 49.85 billion for the March quarter. Analysts had estimated the net profit at INR 42.97 billion. For the financial year ended March, the bank's net profit was INR 179.87 billion compared to INR 136.48 billion the previous year. 

 

Asked about the guidance for the current financial year, the state-owned bank said, "...we are not giving the guidance for the current year (FY26), given the current operating environment, where there is a lot of uncertainty, we also are looking at some more clarity, and then definitely will come back and share our guidance on various parameters."  

 

The bank's management also refrained from giving a forward guidance for the coming quarters citing the looming unceratinty due to ongoing geopolitical tensions. The management will await further clarity and some stability before assessing and coming out with a trajectory for the financial performance, it said.

 

The bank further said it expects its growth to align with the GDP growth in FY26. "We are expecting GDP growth to be around 6% for FY26. If that happens and inflation comes around 3.5% to 4%, we see our growth aligning with GDP growth in the current financial year," the management said. The bank's deposits were 11.99 trillion as on Mar. 31, up INR 7.22% on year.  End

 

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

 

Edited by Tanima Banerjee

 

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