Union Bank of India's net profit up 18% in Q4
Union Bank of India has reported an 18.36% increase in its consolidated net profit for the March quarter, amounting to ₹3,328 crore. This surge was primarily attributed to lower provisions. For the fiscal year 2023-24, Union Bank reported a consolidated net profit of ₹13,797 crore, marking a substantial increase from ₹8,512 crore in the previous year.
Significant increase for FY23-24
In the quarter under review, the bank's standalone net profit also experienced a rise, escalating to ₹3,311 crore from ₹2,782 crore a year ago. This was accompanied by a growth in the bank's core net interest income by 14.38% to ₹9,437 crore. The rise was due to an 11.7% growth in advances, and an expansion of the net interest margin to 3.10% from 2.97%.
Future growth targets and anticipated NIMs
Union Bank's Managing Director and Chief Executive, A. Manimekhalai, has outlined the bank's future growth targets. For FY25, the bank is aiming for a credit growth of 11-13% and deposit growth between 9-11%, compared to the previous year's growth rate of 9.3%. However, Manimekhalai also anticipates a fall in net interest margins (NIMs) to between 2.8-3%.
Non-interest income and recovery plans
The bank's non-interest income fell by over 10% to ₹4,707 crore due to a decrease in recoveries from written-off accounts. For FY25, Union Bank aims to recover ₹16,000 crore compared to over ₹18,000 crore in FY24. The total provisions decreased to ₹3,222 crore from ₹4,041 crore. Despite an increase in fresh slippages, ₹3,202 crore from ₹2,687, the final stock of gross NPAs was lower due to recoveries and write-offs. The bank aims to close FY25 with the number under 4%.
Union Bank's response to RBI's new proposals
Manimekhalai commented on the Reserve Bank of India (RBI)'s new proposals on project finance, stating that they will not significantly impact the bank's financials. She assured that the situation will be "manageable" even if implemented in its current form. The bank has a pipeline of over ₹40,000 crore and expects demand from sectors like data centers, real estate, steel, and renewables.
