Union Bank of India Shares Q3 Results

Union Bank Q3 results was almost neutral in terms of top line growth and operating profit performance. However, like most of the other PSU banks, Union Bank also had the benefit of lower provisions in the current quarter, which resulted in a better bottom line performance. Apart from lower provisions, Union Bank saw overall pick up in credit, especially with focus on retail credit.

Here is Union Bank Quarterly Financial Numbers
 

Let us start with the top line first. Union Bank reported -3.48% fall in total revenues in the Dec-21 quarter at Rs.20,233 crore on a YoY consolidated basis. Union Bank saw marginal growth in revenues from wholesale banking business. However, the income from retail banking was marginally lower while treasury revenues fell sharply in Q3. Revenues were up 6.42% on a sequential basis for the bank in Q3.

The critical variable of net interest income (NII) was up 8.88% at Rs.7,174 crore but the non-interest income of Union Bank was down -15% YoY at Rs.2,524 crore. Domestic advances were up 2.91% and this was largely supported by agriculture lending, MSME lending and retail lending. Deposits were up 6.24% YoY while CASA deposits grew 11.06% over last year. CASA ratio was better by 161 bps YoY to 36.99% as share of total deposits in Dec-21 quarter.

Let us turn to the operating performance of Union Bank for the Dec-21 quarter. Overall, operating profits were down -3.7% at Rs.5,091 crore. The important ratio of Net interest margins or NIMs improved by 6 basis points YoY to 3.00%. However, this is substantially lower than private sector counterparts as well as other major PSU banks.

For the third quarter, the provision coverage ratio (PCR) tapered YoY to 82.8% while the credit cost was also lower by 46 bps YoY at 1.40% in line with falling interest costs. Operating margin or OPM was virtually flat at 25.16% in Dec-21 quarter. However, OPM was sharply lower sequentially compared to 27.98% in the Sep-21 quarter.

Finally, let us look at the bottom line. Profit after tax (PAT) for Dec-21 quarter was up by 49.76% at Rs.1,077 crore. This was largely on the strength of a sharp -11.57% fall in provisions for loan losses and contingencies in the quarter at Rs.4,013 crore. This has been the trend across most PSU bank in the current quarter and that has boosted profits.

Gross NPAs tapered lower from 13.49% to 11.62% in the quarter but is still fairly high in absolute terms. Net NPA ratio was higher by 82 bps at 4.09% due to lower provisioning.  Capital adequacy at 13.85% remains tad vulnerable. PAT margins improved sharply from 3.43% to 5.32% on a YoY basis. However, the net margins were lower by 167 basis points on a sequential basis.