Union Bank posts Rs 153 crore profit after being hit by losses due to NPAs

State-run Union Bank of India Monday reported a profit of Rs 153.21 crore for the December quarter, as against a net loss of Rs 1,249 crore in the year-ago period, as the amount of money it has set aside for bad loans has halved. This is the second consecutive quarter of profitability for the city-based bank having booked a net profit of Rs 139 crore in the September quarter.

However, the core net interest income declined 2.2 per cent to Rs 2,493 crore, while other income grew 25.4 per cent to Rs 1,095 crore majorly on trading gains. Domestic advances moved up 7.9 per cent during the quarter and the bank management guided towards a 7-9 per cent loan growth for the fiscal year to March 2019.

The overall net interest margin stood at 2.23 per cent for the reporting period. The bank has a Rs 1,100-crore exposure to the troubled infra lender IL&FS of which Rs 1,000 crore slipped into non- performing asset during the reporting period, managing director and chief executive Rajkiran Rai said.

Gross non-performing assets increased to 15.66 per cent from 13.03 per cent in the year-ago period but were down from 15.74 per cent in the preceding quarter. Overall provisions came in massively to Rs 1,617 crore as against Rs 3,254 crore in the year-ago period.

The bank sold over Rs 380 crore of bad loans to asset reconstruction companies during the quarter, he said, adding he is expecting up to Rs 4,000 crore in recoveries from the bad assets being resolved through NCLTs in the March quarter. When asked about the fate of the exposure to Essar Steel, which has been put on auction by SBI, Rai said the bank may soon take a call on what to do anytime. The bank has 67 per cent provisions on the 23 accounts which are in NCLTs, he said. The bank counter tanked 6.39 per cent at Rs 86.40 on the BSE, as against a 0.53 per cent gain on the benchmark Sensex.