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Informist, Saturday, Jul. 19, 2025

By Anjana Therese Antony and P. Madhu Kumar

MUMBAI – Union Bank of India said its treasury income is expected to moderate significantly going forward. "Q1 (Apr-Jun) was very different because of the RBI (Reserve Bank of India) actions and initiatives. That trend, I don't think we will be able to see in the remaining part of the year," the management said in a post-earnings call with analysts Saturday. 

For the June quarter, the bank's revenue from treasury operations rose almost 12% on year to INR 86.14 billion. During the quarter, the RBI had cumulatively reduced the repo rate by 75 basis points to 5.50%, of which 25 bps was cut in April and the remaining 50 bps in June. The bank also said these rate cuts were immediately passed on to 46% of its loan book. 

The Mumbai-based bank also expects its net interest margins to see a 20-25-bps moderation for the full year. "If I look at what could be the minimum that we can hit, maybe somewhere between 2.60% to 2.65% is the range where we can hit at the minimum level and from there we should be able to bounce back effectively around 20 to 25 basis points for the year," the management said. Its net interest margin during the reporting quarter was 2.76%, down 29 bps on year and 11 bps on quarter. 

Speaking about its micro, small, and medium enterprises portfolio, the management said there were no large slippages in this segment, but nominal ones. The MSME segment's slippages increased to INR 9.97 billion from INR 9.61 billion a quarter ago and from INR 8.69 billion a year ago. This business' non-performing assets ratio increased to 4.39% in the June quarter from 4.14% a quarter ago, but fell sharply from 8.44% a year ago.  

The lender said it has around INR-200-billion disbursements in its pipeline at various stages of sanctions. It has already sanctioned disbursements to the extent of around INR 510 billion, it said. "...these all will be under the MCLR (marginal cost of funds-based lending rates) which will be giving a better yield for the bank." The bank expects a 25-35 bps reduction in MCLR "maybe over the next six months", which will depend on the competitive interest rate movements in the system. 

Most of the agricultural loans provided by the bank are below INR 200,000, the management said. Its agriculture credit as of Jun. 30 fell more than 9% on year and nearly 4% on quarter to INR 1.716 trillion. Further, the bank said its gold loan book was INR 837 billion as of Jun. 30, compared to around INR 780 billion a year ago.  

Union Bank released its quarterly results Saturday, posting nearly a 12% on-year growth in its net profit to INR 41.16 billion, supported by a sharp fall in its provisions and contingencies, which fell 40% to INR 16.65 billion. Its provisions on non-performing assets also fell over 30% on year to INR 11.53 billion. Ahead of the results, its shares closed Friday at INR 146.46 on the National Stock Exchange, up 0.1%.  End

Edited by Tanima Banerjee

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