State-owned Union Bank of India has reported a healthy set of numbers with net income rising by 28.24% on-year to Rs 4,604 crore driven by higher non-interest income coupled with improved asset quality which cushioned a fall in net interest margin in the December quarter.
However, sequentially, the lender’s net profit declined 2.46% from Rs 4,720 crore in the September 2024 quarter.
The management of the city-based lender told media in Mumbai on Tuesday that the bank’s non-interest income which includes fees, commissions, treasury revenue, and recoveries, grew 17.02% to Rs 4,417 crore while the key interest income rose 9.40% to Rs 17,718 crore as its net interest margin fell 17 bps to 2.91% due to spike in cost of funds.
Interest income rose 6.29% to Rs 26,958 crore and interest expenses rose higher at 9.40% to Rs 17,718 crore and the net interest income inched up 0.79% to Rs 9,240 crore and non-interest income clipped at 17.11% to Rs 4,417 crore.
Better asset quality saw the bank making 21.7% less provisions at Rs 2,888 crore during the quarter.
Another factor that came to the rescue of the bottom line was the better asset quality, with the gross non-performing assets ratio printing in at 3.85, down 98 bps and the net NPA ratio improving by 26 bps to 0.82. In absolute terms, gross NPAs came down by 15.5% to Rs 36,554 crore and net NPAs came down by 19.07% to Rs 7,568 crore. Credit cost rose from 0.56 % to 0.63%.
Its total deposits increased 3.76% to Rs 12.16 trillion, and advances up 5.94% to Rs 9.5 trillion of which retail loans grew by 16.36% to Rs 2.01 trillion, taking the total business up 4.70% to Rs 21.65 trillion.
Asset growth was led by retail, agriculture and MSME (RAM) segments which increased 9.26%, of which retail clipped at 16.36%, agri up 4.34% and MSME book grew 6.34%. RAM advances as a percent of domestic advances stood at 56.69%.
The lender’s provisions for non-performing assets (NPAs) increased to Rs 1,477.3 crore compared to Rs 1,226.3 crore a year ago. The provision coverage ratio, including written-off accounts, stood at 93.42 compared to 92.54 a year ago.