Feb 15, 2017 01:12 PM IST | Source: Moneycontrol.com

Accumulate Union Bank of India; target of Rs 166: KR Choksey

KR Choksey has recommended accumulate rating on Union Bank of India with a target price of Rs 166 in its research report dated February 10, 2017.

Accumulate Union Bank of India; target of Rs 166: KR Choksey

KR Choksey's research report on Union Bank of India

Q3FY17 proved to be mixed quarter for Union Bank of India (UNBK) marked by weak NII and elevated provisioning resulting into slower net profit growth. NII growth (7%+ Y-o-Y, de-grew 6.2% on Q-o-Q) stood tepid led by flat growth in advances (3.5% on Y-o-Y basis) due to the demonetization drive. Net profit for the quarter gone by, stood at INR 1.04 bn (increased 32.4% on Y-o-Y basis; but declined 41% on Q-o-Q basis) was largely led by stupendous increase in the other income (50% on Y-o-Y basis and 17% on Q-o-Q basis) and controlled opex (increased 4.5% on Y-o-basis).

Outlook

The disappointment on asset quality further worsens with gross NPAs and net NPAs standing elevated at 11.7% and 7.0% respectively. Slippages at INR 33 bn stood marginally lower than INR 34 bn reported in Q2FY17. With the asset quality still under pressure with large exposure in infra pertinently dampening the asset quality of the bank and NPAs being on the higher side, we maintain ACCUMULATE recommendation.

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