Union Bank of India Stock Surges 4.5% After Q1 Profit More Than Doubles to Rs 3,236 Crore

Union Bank

Union Bank of India, one of India’s leading public sector banks, witnessed a remarkable surge in its stock price, soaring over 4.5 per cent on July 21, following the announcement of its robust financial performance for the first quarter of the fiscal year 2023-2024. The bank reported an impressive standalone profit of Rs 3,236 crore, marking a staggering 107 per cent increase when compared to Rs 1,558.5 crore in the corresponding period of the previous year.

The significant rise in profit can be attributed to a higher core income and a substantial reduction in provisions made by the state-owned lender. Union Bank of India’s performance stands as a testament to its effective risk management strategies and operational efficiency, even amid challenging economic conditions.

The gross non-performing assets (GNPA) for the bank recorded positive developments, standing at 7.34 per cent in the June quarter, a decline from 7.53 per cent in the previous quarter. Similarly, net non-performing assets (NPA) witnessed an improvement, coming in at 1.58 per cent, compared to 1.70 per cent in the preceding quarter.

In absolute terms, the gross NPA figure decreased by 19.32 per cent on a year-on-year basis, settling at Rs 60,104 crore. Meanwhile, net NPA experienced a significant decline of 45.79 per cent, amounting to Rs 12,138 crore, as reported in the exchange filing.

The bank’s total income displayed remarkable growth in the first quarter of the current fiscal, rising to Rs 27,381 crore from Rs 20,991 crore in the same period last year. This impressive growth in total income reflects Union Bank of India’s concerted efforts to expand its business operations and enhance revenue streams.

Interest earned by the bank exhibited a substantial increase, amounting to Rs 23,478 crore during the quarter under review, as opposed to Rs 18,174 crore reported in June 2022.

The net interest income (NII), a crucial metric representing the difference between interest earned from lending activities and interest paid to depositors, also showcased healthy growth. The NII increased by 16.6 per cent, reaching Rs 8,839.7 crore in the first quarter of the fiscal year 2023-2024, compared to Rs 7,581.7 crore in the corresponding quarter of the previous fiscal year.

The advances and deposits portfolio of Union Bank of India demonstrated positive trends, with both global and domestic advances witnessing substantial growth. The bank’s global advances recorded a 12.33 per cent increase on a year-on-year basis, reaching Rs 8.19 lakh crore. Meanwhile, domestic advances saw an 11.77 per cent rise, totaling Rs 7.94 lakh crore in the April-June quarter.

Despite the positive performance in advances, retail term deposits (less than Rs 2 crore) experienced a marginal decline of 0.58 per cent on a year-on-year basis, amounting to Rs 4.36 lakh crore. On a sequential basis, these deposits fell by 0.43 per cent.

Union Bank of India revised its fixed deposit (FD) interest rates for amounts less than Rs 2 crore in May 2023. The bank is currently offering an interest rate of 3 per cent on fixed deposits maturing between seven to 45 days.

The bank’s strong financial results and improved asset quality are expected to bolster investor confidence and contribute to its continued growth trajectory in the highly competitive banking sector. As the bank navigates the dynamic economic landscape, its strategic approach and customer-focused initiatives are likely to be key drivers in maintaining its upward momentum.

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