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Union Bank: Asset quality woes persist - Views on News from Equitymaster
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Union Bank: Asset quality woes persist
May 23, 2013

Union Bank of India (UBI) declared its results for the fourth quarter of financial year 2012-2013 (4QFY13). The bank has reported 8.7% YoY growth in net interest income and mere 2% YoY growth in net profits. Here is our analysis of the results.

Performance summary
  • Net interest income (NII) grows by 8.7% YoY in 4QFY13, on the back of 17.1% YoY growth in advances.
  • NIMs (net interest margins) move down marginally from 3.2% in FY12 to 3.0% in FY13 due to lower lending yields.
  • Net NPAs move down from 1.7% in FY12 to 1.6% in FY13. Gross NPAs too were contained at just below 3% levels.
  • Net profit rises by mere 2% YoY in 3QFY13 on account of higher provisioning and higher interest costs
  • Capital adequacy ratio stands at 11.5% at the end of 31st March 2013 as per Basel II norms.
Rs (m) 4QFY12 4QFY13 Change FY12 FY13 Change
Interest income 56,875 66,251 16.5% 210,285 251,247 19.5%
Interest expense 38,668 46,456 20.1% 142,354 175,819 23.5%
Net Interest Income 18,207 19,795 8.7% 67,931 75,428 11.0%
Net interest margin (%)       3.2 3.0  
Other Income 8,113 8,755 7.9% 24,482 25,520 4.2%
Other Expense 10,332 11,703 13.3% 39,875 45,122 13.2%
Provisions and contingencies 5,172 6,555 26.8% 25,410 25,184 -0.9%
Profit before tax 10,816 10,291 -4.9% 27,128 30,643 13.0%
Tax 3,085 2,397 -22.3% 9,256 9,064 -2.1%
Effective tax rate 28.5% 23.3%   34.1% 29.6%  
Profit after tax/ (loss) 7,732 7,894 2.1% 17,871 21,579 20.7%
Net profit margin (%) 13.6% 11.9%   8.5% 8.6%  
No. of shares (m)         596.8  
Book value per share (Rs)*         264.4  
P/BV (x)         0.9  

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