The March quarter's net profit for Union Bank of India increased by 80.57% to Rs 2,811 crore, thanks in large part to a sharp increase in recovery from accounts that had been written down.
The state-owned lender's overall net profit for 2022–23 was Rs 8,512 crore, up from Rs 5,265 crore the previous year.
Due to a 13% rise in advances and a widening of the net interest margin to 2.98% from 2.75% in the prior quarter, its core net interest income climbed by 21.88% to Rs 8,251 crore in the March quarter.
In the period from January to March 2023, non-interest revenue increased by 62.48 percent to Rs 5,269 crore, aided by strong results in the area of recoveries.
The amount of money recovered from accounts that had previously been written off increased dramatically, from Rs 294 crore to Rs 2,954 crore, boosting the bottom line.
The bank began FY23 with a recovery goal of Rs 15,000 crore, according to Managing Director and Chief Executive A Manimekhalai, but it surpassed its own expectations by recovering almost Rs 20,000 crore in loans.
She said that the bank anticipates a robust demand for corporate loans, where the loan pipeline is above Rs 35,000 crore, and added that the bank is looking for an overall loan book increase of 10–12% in FY24.
According to her, the corporate loanbook as a whole increased by 11% in FY23, with the growth occurring in the hybrid annuity model-based road projects, renewables, steel, and cement sectors.
In the quarter under review, the bank's new slippages fell to Rs 2,687 crore, while the percentage of gross non-performing assets (NPAs) increased to 7.53 percent from 11.11 percent in the same quarter last year and 7.93 percent at the end of December 2022.
It made Rs 2,935 crore in provisions for the quarter as opposed to Rs 3,618 crore in the same time last year, which also contributed to the increase in earnings.
As of March 31, 2023, the bank's total capital adequacy was 16.04 percent, with the core tier-I buffers at 12.36 percent.
Manimekhalai said that the bank's board has authorised a proposal to raise Rs 10,000 crore in capital, which would be made up of Rs 8000 crore in new equity capital to strengthen the core buffer, Rs 1,000 crore in extra tier-I capital, and Rs 1,000 crore in additional tier-II capital.
According to her, the bank would choose the time and method of capital raising depending on the status of the market, and the capital raise will also assist reduce the state ownership in the lender to below the 75% threshold required by markets regulator SEBI by August 2024. Currently, the Government of India owns more than 83 percent of UBI.
She said that 42 accounts with a combined value of Rs. 1.62 lakh crore in bad assets have been found so far by the National Asset Reconstruction Company. 24 of the discovered accounts include exposes for UBI, she said.
