Union Bank posts 78% slide in Q4 net on higher bad loans provision

State-run Union Bank of India on Friday reported a 78% plunge in the March quarter profit at Rs 96.12 crore as the bank made higher provisions for bad loans which zoomed over three-fold to Rs 2,008 crore.

Gross bad loans nearly doubled to 8.70% of the total loans in the March quarter from 4.96% a year ago. The figure stood at 7.05% in the December quarter, the bank's chairman and managing director Arun Tiwari told reporters.

Provisions for loan losses jumped to Rs 2,008 crore during the quarter from Rs 833 crore in the year-ago period.

For the full year, the bank's provisioning rose to Rs 4,291 crore from Rs 2,536 crore, he added.

Net NPA ratio also rose to 5.25% from 2.71% in March 2015.

When asked whether the bank is done with the Asset Quality Review (AQR) provisioning, Tiwari answered in the affirmative.

He said the bank saw fresh slippages mounting to Rs 6,170 crore, mostly from the RBI's AQR accounts.

Restructured loans rose to Rs 13,617 crore out of which loans worth Rs 4,500 crore slipped into NPAs.

As many as 11 accounts worth Rs 2,520 crore were restructured under the 5/25 scheme, out of which four accounts were in the power sector and three from the steel sector.

The bank wrote off loans worth Rs 785 crore during the year, while it recovered Rs 2,204 crore from written off accounts, out of which Rs 395 crore were in the reporting quarter, up from Rs 196 crore in the three months to December.

On the recovery efforts, Tiwari said three general managers are fully into this now.

Loans worth Rs 1,835 crore have gone into SDR during the quarter while it sold Rs 177 crore of NPAs to asset reconstruction companies in the quarter.

In the first three quarters the bank did not sell any NPAs to ARCs, Tiwari said.

In the January-March period of 2014-15, it had a net profit of Rs 443 crore.

Net interest income for the March quarter stood at Rs 2,085 crore, down from Rs 2,122 crore a year ago, and non-interest income slipped to Rs 997 crore from Rs 1,143 crore.Net interest income for the entire fiscal came down to Rs 8,314 crore from Rs 8,444 crore, while non-interest income rose 3.1% to Rs 3,632 crore, and net income for the year slipped to Rs 1,352 crore from Rs 1,782 crore.

The share of Casa deposits rose by 310 bps to 32.3% and the bank has set a target of taking this to over 33% in the current fiscal.

Savings deposit grew 13.4%, while the share of high-cost deposits declined to 2.1% from 3%.

Higher Casa helped the bank improve its NIM by 10 bps to 2.32%. Non-interest income for the full year rose to 3.1%.

Total advances increased 5.7% to Rs 2,77,725 crore, while domestic advances rose 4.3% to Rs 2,51,653 crore. The bank has kept a target of 9.3% advances growth in the current fiscal and a deposit growth of 7%.

The provision coverage slipped to 50.98% from 59.23% in the same period of 2014-15. The bank's capital adequacy ratio under Basel III improved to 10.56% from 10.22% in March last year, with the tier I being at 8.14%.

The bank's counter on Friday closed 1.9% down at Rs 115.95 on the BSE.