PSU banks announce share-swap ratios ahead of April 1 merger

Following the footsteps of State Bank of India and Bank of Baroda, the boards of 10 public-sector banks on Thursday approved mergers and issued share-swap ratios to create four large banks in the economy.
The four anchor banks will be Punjab National Bank, Canara Bank, Union Bank of India, and Indian Bank. The merger will be effective from April 1.
Last year, Bank of Baroda took over Vijaya Bank and Dena Bank. Before that, State Bank of India (SBI) had merged all its five associate banks with itself to enter the global top 50 banks’ list in terms of size. Punjab National Bank (PNB) will merge with United Bank of India and Oriental Bank of Commerce to create the largest bank in the country after State Bank of India.

According to notifications to the stock exchanges, Delhi-based PNB will issue 1,150 shares for 1,000 shares of Oriental Bank of Commerce, and 121 shares for 1,000 shares of United Bank of India.
Mumbai-based Union Bank of India will take Andhra Bank and Corporation Bank. Union Bank of India will issue 325 shares for 1,000 shares of Andhra Bank, and 330 shares for 1,000 shares of Corporation Bank.
Bengaluru-based Canara Bank will issue 158 shares for 1,000 shares of Syndicate Bank.
Allahabad Bank said for every 1,000 shares (face value Rs 10) of Allahabad Bank, there would be 115 shares (face value Rs 10) of Indian Bank.
The Union Cabinet had approved the consolidation to build the mega banks “to create more efficient and bigger public sector banks in the challenging environment to meet the credit needs of a growing economy and to achieve operational efficiency by scale of business”. The amalgamation will lead to a wide geographical reach, technology adaption, and, more importantly, better utilisation of scarce capital.
A grievance redress system has been put in place, and a committee has been formed headed by a retired judge. If shareholders have any issue with the swap ratio — for example, if they feel they didn’t get enough time or if they need information — they can raise it. This is the board-approved swap ratio.
“After the committee receives all the grievances, it will have seven days to recommend changes, if needed, which will be the final swap ratio,” said a top official of a PSB to be merged.
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United Bank of India posts profit in Q3; asset quality improves YoY


State-owned United Bank of India has reported Rs 114 crore net profit for the December quarter, compared with Rs 1139 crore net loss in the year ago period. It operating profit grew 67% at Rs 637 crore as against Rs 383 crore for the same period.

The bank's asset quality improved when compared to annually but they remained largely at the same level sequentially.

Its gross non performing assets ratio was at 15.48% at the end of the third quarter to December, compared with 15.51% at the end of September while it was 21.27% a year ago.

Net NPA ratio slipped to 8.56% from 7.88% three months back. It was however an improvement when compared to a year ago's 12.08%.

UBI, which is set to be merged with Punjab National Bank and Oriental Bank of Commerce, has reported net interest margin at 2.98% for the third quarter, an improvement of 98 basis points over the year ago period. Net interest income increased to Rs 819 crore against Rs 380 crore in the same period.

Its total business stood at Rs 2.09 lakh crore with advances growing 6.8% to Rs 73991 crore
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United Bank of India reports Q2 net profit as bad loans fall substantially

State-owned United Bank of India reported a net profit of Rs 123.88 crore in the second quarter ended September 30, on the back of substantially lower dud loans, leading to lower provisioning requirement.

The Kolkata-headquartered bank had posted a net loss of Rs 883.17 crore in the July-September period of 2018-19.

Sequentially, there was a net profit of Rs 105 crore in the first quarter ended June this year.

The lender's total income rose to Rs 3,013.74 crore in the September 2019 quarter, compared with Rs 2,600.47 crore earned in the corresponding period of the previous financial year, the bank said in a regulatory filing on Wednesday.

The bank brought down its net non-performing assets (NPAs) to 7.88 per cent as on September 30, from 14.36 per cent by the end of September 2018.

Gross NPAs or bad loans reduced to 15.51 per cent of the gross advances by the end of September, compared with 22.69 per cent in the year-ago period.

In absolute terms, the net NPAs were Rs 5,380.93 crore against Rs 8,658.10 crore, while the gross NPAs were Rs 11,544.19 crore from Rs 15,163.28 crore.

Thus, the bank's provisioning and contingencies requirement for July-September 2019 came down to Rs 436.42 crore from Rs 1,481.24 crore parked aside for the year-ago period.

The lender said it made additional provision of Rs 46.75 crore in respect of eligible NCLT accounts by the end of second quarter.

"Actual provision as on September 30, 2019, for NCLT (list 1 and 2) accounts stand at Rs 3,322.77 crore instead of Rs 3,276.01 crore as per IRAC (income recognition and asset classification) norms," it added.

Provision coverage ratio as on September 30 stood at 74.89 per cent, said United Bank of India.

"Pursuant to the government's letter dated August 30, 2019 on amalgamation of PSBs (public sector banks), the board of directors of the bank at its meeting held on September 18, 2019, had considered and accorded its in-principle approval for amalgamation of United Bank of India, Oriental Bank of Commerce and Punjab National Bank and commencement of the amalgamation process, subject to all applicable approvals," it added.
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Five PSU banks have over 70% NPA from industry in FY19


The non-performing assets (NPAs) in the industry sector accounted for over 50 per cent of the total bad debts in 18 of the 20 state-run banks in 2018-19, indicating the massive concentration risk still facing the banking sector.

Five state-run banks reported that bad debts from industry contributed more than 70 per cent of their total NPAs, according to Reserve Bank of India (RBI) data presented by the Finance Ministry to the Lok Sabha Monday.

Alarmingly, of these five banks, four are relatively smaller ones.

Andhra Bank had the highest share of industry bad debts at 86 per cent, followed by United Bank of India (UBI) at 78 per cent and Indian Bank at 74 per cent.

The country’s largest bank, State Bank of India (SBI) had 73 per cent of its bad debts from the industry sector, followed by Allahabad Bank at 70 per cent.

Only two banks saw the share of industry NPAs at less than 50 per cent — Syndicate Bank and Bank of India at 36 per cent and 49 per cent, respectively.

Industry issue
Basic metals and metal products, gems and jewellery, engineering, vehicles, construction and textiles have been the major groups within industry seeing high levels of stress, RBI had pointed out in its December 2018 report of trends and progress in banking in India.

In 2017-18, even though industry received 37.3 per cent of total loans and advances by all the banks, it contributed to about three-fourth of the total NPAs.

However, with resolution under the Insolvency and Bankruptcy Code (IBC) picking up pace in 2018-19, industry NPAs have been coming down and banks have been making better recoveries.

The gross NPAs of state-run banks as of March 2019 was at Rs 8.06 lakh crore, as against Rs 8.95 lakh crore in the year-ago period.

Steps taken to resolve bad debts
The Modi government has announced many steps over the last few years to tackle the burgeoning bad debt problem. These include enactment of the IBC, amendments to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, staffing the debt recovery tribunals, and asking banks to crack down on defaulters.

However, despite all these steps, resolution of bad debts has been a slow process, forcing the Modi government to go in for a massive bank capitalisation drive to ensure that state-run banks do not breach any regulatory capital requirements.

The government has also accelerated the bank consolidation drive by merging a big banks with smaller, lesser-performing ones to create a large competitive entity. The government merged State Bank of India with its associate banks and followed it with the merger of Bank of Baroda, Vijaya Bank and Dena Bank.
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United Bank of India Q1 result, posts profit as NPAs decline

United Bank of India on Tuesday reported a net profit of Rs 105 crore for the June quarter on the back of a rise in core income and fall in non-performing assets. The Kolkata-headquartered lender had registered a net loss of Rs 388.68 crore during the April-June quarter of the previous fiscal year.

Total income in the first quarter rose to Rs 3,003.13 crore from Rs 2,549.71 crore in the year-ago quarter, United Bank of India said in a regulatory filing.During the quarter, the bank's interest income increased to Rs 2,374.39 crore from Rs 2,155.02 crore while income from other sources jumped to Rs 628.74 crore from Rs 394.69 crore in the year-ago quarter.

Net interest margin (NIM) increased by 47 basis points to 2.83 per cent in the first quarter from 2.36 per cent year ago, the bank said. Net interest income for the quarter rose to Rs 727.47 crore from Rs 545.30 crore year earlier.

The bank brought down its bad assets substantially as the gross non-performing assets (NPAs) fell to 15.89 per cent of gross advances as on June 30, 2019, from 22.73 per cent of gross advances as at end of June 2018. The net NPAs were nearly halved to 8.19 per cent from 15.17 per cent.

In value terms, gross NPAs or bad loans stood at Rs 11,639.74 crore as on June 30, 2019, as against Rs 15,169.21 crore a year ago. Net NPAs were at Rs 5,496.09 crore, down from Rs 9,232.61 crore.

Thus, the overall provisioning and contingencies for June quarter of 2019-20 came down to Rs 571.65 crore from Rs 856.30 crore in the same period of 2018-19.

"Provision for non-performing loans in June quarter declined by 40.60 per cent on the year. Stressed assets position showed continuous improvement," United Bank of India said.

The return on assets as of June 30, 2019, was 0.28 per cent against (-) 1.08 per cent at the end of June 2018.

Total business stood at Rs 2.06 lakh crore with deposits at Rs 1.32 lakh crore and advances at Rs 73,249 crore. Deposits grew by about 3 per cent, advances increased by 9.75 per cent and total business improved by 5.29 per cent on a year-on-year basis, the bank said in a release.

Provision Coverage Ratio (PCR) improved to 74.38 per cent as on June 30, 2019, against 56.91 per cent as on June 30, 2018. The bank said it is focussing on RAM (retail-agriculture-MSME), for which the credit portfolio is expected to reach 60 per cent, in order to achieve sustained growth and profitability.
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United bank of India posts profit in Q4FY19

After making losses for seven consecutive quarters, city-based United Bank of India (UBI) registered a net profit of ₹95.18 crore in the last quarter of 2018-19, a bank statement said on Monday.

The total business of the bank crossed ₹2 lakh crore at the end of March 2019.

Operating profit of the bank was ₹540 crore in the last quarter as against ₹383 crore in the corresponding period last fiscal, the statement said.

Net interest margin (NIM) of the bank stood at 2.43%.

The bank's net interest income increased to ₹1975 crore in the full fiscal as against₹1493 in the previous financial year.


Stressed assets position of the bank improved with GNPA and NNPA at 16.48% and 8.67% respectively as on 31 March, 2019, the statement added.
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United Bank of India loss widens in Q3FY19 due to NPA rise

State-owned United Bank of India on Tuesday reported widening of loss to Rs 1,139.25 crore for the December 2018 quarter, owing to rising bad loans.
The Kolkata-based lender had posted a loss of Rs 637.53 crore in the corresponding quarter a year ago.
However, the total income of the bank rose to Rs 2,846.23 crore during the quarter, compared with Rs 2,483.01 crore in the year-ago quarter.


Also read- Q3FY19 Results of all Public & Private Sector banks in India 
Its asset quality worsened with gross non-performing assets (NPAs) rising to 21.27 per cent (Rs 14,737.61 crore) of the gross advances as on December 2018, compared with 20.10 per cent (Rs 13,720.69 crore).
Net NPAs or bad loans also increased to 12.08 per cent (Rs 7,489.89 crore) from 11.96 per cent (Rs 7,365.14 crore).
As a result, provision other than tax and contingencies nearly doubled to Rs 1,967.20 crore, compared with Rs 1,074.35 crore in the same period a year ago.
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United Bank of India net loss widens in Q2

United Bank of India Tuesday reported widening of net loss to Rs 883.17 crore in the second quarter of the ongoing financial year due to higher provisioning and contingencies.
The state-owned bank reported a loss of Rs 344.83 crore in the September quarter of 2017-18.In the quarter ended June this fiscal, the bank had posted a net loss of Rs 388.68 crore.Net loss for the reported quarter was mainly on account of higher provisioning, the bank said in a release.

Total income during the quarter stood at Rs 2,600.47 crore, up from Rs 2,584.89 crore in the same period of 2017-18.The bank’s overall provisioning and contingencies during the reported quarter nearly doubled to Rs 1,481.24 crore as against Rs 753.09 crore in the year-ago period.
However, there was a write-back of Rs 1,096.94 crore with respect to provision for non-performing assets (NPAs) during the quarter, which was higher than a write-back of Rs 876.15 crore in the second quarter of 2017-18.

Asset quality of the bank worsened as gross NPAs rose to 22.69 per cent of gross loans as at end-September 2018 from 18.80 per cent by the same period of 2017.Net NPAs rose to 14.36 per cent from 11.63 per cent.NPA provisions, both gross and net, showed improvement sequentially.In value terms, gross NPAs stood at Rs 15,163.28 crore by the end of September 2018 as against Rs 12,892.67 crore in the year-ago period. Net NPAs were valued at Rs 8,658.10 crore as against Rs 7,279.64 crore.
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