Union Bank of India (UBI) reported a 93 per cent year-on-year (yoy) rise in fourth quarter (Q4FY23) net profit to ₹2,782 crore on the back of healthy growth in net interest income and a strong recovery of the cancellation. accounts
The public sector bank had reported a net profit of ₹1440 crore in the year-ago quarter. Net profit in the reporting quarter is 24 per cent higher than Rs 2,245 crore in the third quarter.
The bank’s Board has recommended a dividend of ₹3 per capital share of ₹10 each for FY23.
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Net interest income (difference between interest earned and interest spent) increased 22% YoY to ₹8,251 crore (₹6,769 crore in the prior-year quarter).
Non-interest income (which includes fee-based income, treasury income and recovery on terminated/OT accounts) soared 62% yoy to Rs 5,269 crore (Rs 3,243 crore). Within this, the payback on WO accounts increased 10 times to ₹2954 crore (₹294 crore).
The provision for non-performing assets (NPA) rose 13% yoy to Rs 3,567 crore (Rs 3,154 crore).
Net interest margin improved to 2.98% in Q4FY23 from 2.75% in Q4FY22.
GNPA’s position improved to 7.53% of gross advances at end-March 2023 from 7.93% at end-December 2022. NPA’s net position also improved to 1.7% of net advances vs. at 2.14%.
Gross advances increased 13% yoy to Rs 8,09,905 crore as of end-March 2022. Total deposits increased 8% to Rs 11,17,716 crore.
A Manimekhalai, MD & CEO, said the Bank anticipates 8-10% growth in deposits and 10-12% growth in advances in FY24.
He noted that the bank has a pipeline of corporate loan sanctions of ₹35,000 crore. This includes sanctions on companies in sectors such as highway projects, steel, renewable energy and chemicals.
Manimekhalai said that the position of Special Mention Accounts (SMAs; these are accounts showing signs of incipient stress) in the case of retail lending is a bit risky. However, these loans are backed by adequate collateral, she added.
To raise money
The bank plans to raise Rs 10,100 crore in FY24 through equity (Rs 8,000 crore), additional Tier 1 bonds (Rs 1,000 crore) and Tier 2 bonds (Rs 1,100 crore). .
Fundraising through equity will serve two purposes: raising capital to grow the business and complying with SEBI regulations that require a publicly traded company to have a minimum 25 percent public stake.
Public Participation Policy
Manimekhalai said the bank has until August 2024 to meet the minimum public participation standard. As of the end of March 2023, the government and public shareholdings in the bank were 83.49% and 6.57%, respectively.