State-owned Union Bank of India reported an 8.3% year-on-year (YoY) rise in net profit for the quarter ended March 31 backed by robust net interest income.
The net profit for the quarter stood at Rs 1,440 crore against Rs 1,330 crore in the year-ago period.
Net interest margin (NIM), a key profitability ratio, improved 37 basis points to 2.75% in the reporting quarter. Net interest income rose 25.3% at Rs 6,769 crore.
"We endeavour to maintain NIM at around 3%," managing director Rajkiran Rai said.The lender's operating profit rose 11.3% to 5530 crore. Total provision was 12.4% higher at Rs 4,081 crore.
Its asset quality improved with the gross non-performing assets ratio falling to 11.11% at the end of March as compared with 13.74% a year back. The net NPA ratio improved to 3.68% against 4.62%. The capital adequacy ratio stood at 14.52%.
The bank's advances grew 9.6% year-on-year to Rs 7.16 lakh crore while deposits rose 11.75% to Rs 10.3 lakh crore.
"Our guidance is to grow advances by 10-12% this year," Rai said. He said that a 50-100 basis point rise in rates would not impact long-term credit demand although corporates may look for alternate sources for short-term loans.
The bank has Rs 2700 crore exposure to the Future Group and Rs 2492 crore exposure to Srei. Rai said the risks are covered by 58% provision and 86% provision respectively.
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