Union Bank Q4 net up just 2% but beats estimates widely

Moneycontrol Bureau

Public Sector lender Union Bank of India (UBI) reported muted growth of just 2 percent year-on-year in its fourth quarter net profit to Rs 789 crore on higher provisions. Provisions and contingences shot up 27 percent Y-o-Y to Rs 656 crore. The rise was primarily on account of RBI's revised guidelines on different provisioning norms.

However, Union Bank shares rose 6 percent immediately after the earnings and currently trading at Rs 245, up 2 percent at 14.40 hours. Market was expecting a 15 percent fall in net profit. Investors cheered even a paltry rise in net profit, which was actually a sharp "come back" in relative terms.

"Provisions of non-performing assets, standard assets, standard derivative exposure and investment depreciation has been made on the basis of extant guidelines issued by the Reserve Bank of India on prudential norms for income recognition, asset classification and provisioning," the bank said in a release sent to stock exchanges.

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Net interest income or the differnce between interest earned and paid out, rose more than 5 percent to Rs 1,980 crore. Other income rose 8 percent to Rs 875 crore while the bank paid Rs 240 crore tax as compared with Rs 308 crore. The rise in other income coupled with a fall in tax expenses virtually helped the bank to remain in profit zone.

The bank expanded its loan book 17 percent Y-o-Y to Rs 2.08 lakh crore. Deposits grew more than 18 percent to Rs 1.78 lakh crore.

Gross non-performing asset ratio was a little improved at 2.98 percent compared with 3.01 percent a year back. Net NPA ratio improved to 1.61 percent as against 1.70 percent during the same period.

The bank recommended a dividend of Rs 8 per share for the financial year 2012-13.

saikat.das@network18online.com