Union Bank posts Rs 575 crore profit in Q3

MUMBAI: Union Bank of India has reported a net profit of Rs 575 crore for the quarter ended December 2019, nearly four times the Rs 153 crore it earned in the year-ago period.
Profits were higher on the back of lower provisions of Rs 1,570 crore towards NPAs during the quarter, down 72% from Rs 5,783 crore in the previous year. Overall provisions fell 64% to Rs 1,827 crore.Of the total provisions, Rs 2,260 crore was made toward a single large account in the housing finance sector, believed to be DHFL. Apart from that, the slippages were in keeping with trend, the bank’s MD & CEO Rajkiran Rai said.
The banks gross advances grew 5.9% to Rs 3.36 lakh crore. Deposits rose 10% year-on-year to Rs 4.45 lakh crore from Rs 4.02 lakh crore. The bank also reduced its home loan interest rates by up to 30 basis points (100 bps = 1 percentage point) from 8.2% to 7.9% for some categories.
“There is a steady improvement in operating efficiency. This quarter, we had good recoveries in Essar Steel, Ruchi Soya and Prayagraj. These three accounts brought in nearly Rs 2,000 crore. Recoveries and upgradations amounted to Rs 2,837 crore,” said Rai. He added the bank is looking at another Rs 3,000-crore recovery and upgradations during the current quarter.
Around Rs 1,500 crore recoveries are expected from large accounts in the National Company Law Tribunal (NCLT), he said.
Rai said the bank expects good credit growth in the last quarter and the RBI’s term repo will bring down the lender’s cost of funds, which will be passed on to borrowers in the form of lower marginal cost of lending rate (MCLR). He said the interest rates on one-year deposits could come down by 25 bps in the one-year category.