Union Bank of India Ltd. reported a loss for the third straight quarter as asset quality deteriorated and provisions against bad loans surged.
The state-owned bank incurred a wider-than-expected loss of Rs 2,583.4 crore in the quarter ended March as compared to a profit of Rs 108.2 crore in the same period last year, according to its filing with the stock exchanges. That despite a Rs 1,195 crore tax writeback during the quarter. Analysts tracked by Bloomberg had pegged the loss at Rs 1,200 crore.
Net interest income, or the core income of the bank, rose 8.1 percent to Rs 2,193 crore missing analyst estimates.
Asset quality worsened with gross bad loans increasing to 15.53 percent as a percentage of total assets from 13 percent on a sequential basis. The ratio of net non-performing assets rose to 8.4 percent from 6.9 percent last quarter. Provisions for bad loans more than doubled to Rs 5,638 crore while slippages also jumped to Rs 10,043 crore from Rs 4,187 crore.
The bank said it has provided completely for fraud in two gems and jewellery accounts and has received all payments due in the Punjab National Bank case.
Other Key Highlights:
- Global net interest margin contracted 330 basis points sequentially to 19.9 percent.
- Loan book grew 0.8 percent, while deposits advanced 8.7 percent.
- Gross bad loans in absolute terms rose 20 percent sequentially to Rs 49,370 crore.
- Capital adequacy ratio stood at 11.5 percent.