Union Bank Q2 PAT seen up 71% at Rs 519 cr

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Union Bank Q2 PAT seen up 71% at Rs 519 cr

Union Bank of India is expected to report a profit after tax of Rs 519 crore for the second quarter of FY12 as against Rs 303.4 crore in the corresponding quarter of last fiscal.

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Union Bank of India is expected to report a profit after tax of Rs 519 crore for the second quarter of FY12 as against Rs 303.4 crore in the corresponding quarter of last fiscal, according to CNBC-TV18 estimates.

Net interest income is seen going up by 6% to Rs 1,626 crore from Rs 1,535.8 crore year-on-year.

((Last quarter was very bad for the bank; net profit dropped 37% due to higher provisioning. Results are expected to improve from this quarter onwards))

PAT likely to jump due to:
o         Lower base effect
o         Provisioning will be much less - expected to decline due to high base in 2QFY11
o         Also, bank made 1 time provision of Rs 210 crore in Q1FY12 due to change in guidelines

Advances and deposits expected to grow in line with the industry

Loan expected to grow 22%, deposits 17%

Net interest margins (NIMs) are likely to have bottomed out - too much downward movement not expected
o         NIMs in Q2FY12: 3.10% ((NIMs saw a significant fall last quarter as well))

NPAs expected to increase with systemic recognition - full transition ((Last quarter agriculture loans were yet to be moved to system based NPA recognition))

Asset quality concerns expected to persist

Watch out for - margin movement, trends in slippages