United Bank posts Q2 profit at Rs 124 crore as bad loans drop

The net NPA ratio also decreased 31 bps sequentially at 7.88%.

Public-sector lender United Bank of India on Wednesday reported a net profit of Rs 123.88 crore for the second quarter ended September 30 against a net loss of Rs 883.17 crore in the same period a year ago, backed by a nearly threefold year-on-year jump in its operating profit and a 70.56% fall in provisions as bad loans declined.

On sequential basis, the bank’s net profit for the quarter rose by around 18% quarter-on-quarter from Rs 104.99 crore for the June quarter. During the September quarter, gross non-performing assets (NPAs) in absolute terms fell to Rs 11,544.19 crore from Rs 11,639.74 crore in the June quarter, according to a stock exchange filing by the lender. Gross NPAs as a percentage of total loans fell 38 basis points (bps) to 15.51% from 15.89% during the previous quarter. The net NPA ratio also decreased 31 bps sequentially at 7.88%.

Ashok Kumar Pradhan, MD & CEO, United Bank of India, said, “On all the key parameters the bank has recorded significant improvement on year-on-year basis. The bank has shown improvement in interest income as well as in non-interest income. We have been able to save on interest expenses and provisioning requirements despite the fact that we have made 100% and 86% provisioning against our exposures to accounts under the RBI’s first and second list (referred to IBC), respectively.”

Pradhan said fresh slippages during the quarter was “more or less the same” compared with the same period last fiscal. “Fresh slippages stood around Rs 1,040 crore due to four five accounts. Corporate slippages is around 82% of the total fresh slippages and the rest is in the retail segment,” he said.

According to Pradhan, the record date for the proposed amalgamation of Punjab National Bank, United Bank of India and Oriental Bank of Commerce would most likely be April 1, 2020. The board of directors of United Bank had last month accorded its “in-principle approval” for the proposed merger and commencement of the process, subject to all applicable approvals. The three banks will be merged to become the second largest public-sector bank in the country.

Operating profit stood at Rs 598.57 crore compared with Rs 206.37 crore for the same period last year. Net interest income (NII), the difference between interest earned and interest expended, grew 74.6% y-o-y at Rs 772.78 crore, while non-interest income soared 20.29% y-o-y at Rs 573.84 crore. Net interest margin (NIM) stood at 2.91%, an improvement of 75 bps y-o-y. The bank, in a release, said its advances increased by 11.36% y-o-y at Rs 74,421 crore.

Provisions and contingencies fell to Rs 436.42 crore for the second quarter of FY20 from Rs 1,481.24 crore in the corresponding period of FY19. The lender, which is under the prompt corrective action framework of RBI, said its provision for NPAs in the quarter declined by 47.16% y-o-y at `579.58 crore. Provision coverage ratio (PCR) improved to 74.89% as on September 30, 2019, against 60.10% a year ago.