Q4 net profit slipped due to huge provision: UBI

State-owned Union Bank of India posted its fourth quarter net profit of Rs 597 crore as against Rs 594 crore in same quarter the previous year. However, a marginal fall of 0.24% is seen in its consolidated FY11 net profit at Rs 20.69 billion compared to Rs 20.74 billion for FY10. In an interview on CNBC-TV18, MV Nair, chairman and managing director of the bank said that a slippage in the net profit is a result of the most provisions that happened in the last quarter.

Union Bank Q4 net profit up at Rs 597 cr
Below is a verbatim transcript of his interview on CNBC-TV18. Also watch the accompanying video. Nair: Net interest income has grown by 48.5%, very robust growth there. Our net interest margin has gone up from 2.71- 3.33%. So, the core business has given us profit, but we have made huge provision for a second option of pension, which is Rs 1000 crore. So, after making that provision, the operating profit has gone up by 17.7%, but net profit is flat because most of the provision happened in the last quarter because the Reserve Bank, a finery side, retired employee issues, etc. So, it had happened in the last quarter. Thus, overall if you really look at it, the provision that we have made in our profit is very good. Q: Your NPA provisions has been lower, what is the reason for that? A: I would like to correct you on this. If you see the year on year basis, the provision for NPA has gone up by almost Rs 500 crore. The quarter, that is last year fourth quarter to this year fourth quarter, it has come down because last year fourth quarter we made huge provision, so it is not very correct to measure provisioning quarter-on-quarter basis. In case of three quarters, we have made more provision and last quarter we may not make provision, but a whole year has gone up by Rs 500 crore. Q: But your PCR has fallen below 70%, is it largely because any sort of write off that we saw, which had a higher provision? A: No, you are right, one factor is rite off. But this is very interesting, the way it has moved in the Union Bank, I have been making this point last one and half years, the Union Bank