Despite falling NIM, non-interest income boosts Union Bank net by 28.2 per cent

Better asset quality has the bank making 21.7 per cent less provisions at Rs 2,888 crore during the quarter.
The logo of Union Bank of India
The logo of Union Bank of India(FIle Photo)
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MUMBAI: State-owned Union Bank of India has reported a healthy set of numbers with net income rising by 28.24 per cent 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 reporters here 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 has 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 per cent 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.

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