Union Bank of India disappointed the Street with the third quarter net profit falling 8.1 percent year-on-year to Rs 302.4 crore, impacted by higher provisions. Other income, however, supported the bottomline but asset quality of the bank deteriorated during the quarter. Net interest income grew 8 percent to Rs 2,121 crore in the quarter ended December 2014 from Rs 1,963 crore in the year-ago period, which was in line.
In an interview to CNBC-TV18, Arun Tiwari, CMD of Union Bank of India, discusses the company’s numbers and its future outlook.
Below is the transcript of Arun Tiwari’s interview with Masavi Ghelani on CNBC-TV18.
Q: The results are little disappointing, there has been a drop in the net profits as well a shift in your net interest margins (NIMs). Can you give us a sense on what happened there and do you see that panning out even for the next few quarters, what is your expectation like?
A: If incidence of NPA increases I have to write back and going forward I have no interest income; predominantly it has been that reason only. As I shared sometime back the numbers about the slippage of the last quarter, Rs 738 crore which was Rs 968 crore in the Q2 of the current financial year, going forward if I look the industries which comprises non-performing assets (NPA) they will be a quarter or two here and after when there will be an uptick. I am sure because most of it is power, metals, in some cases roads. If we are talking about 6 percent plus economy growth all these segments of the industry have to perform well. Once they perform well one, I will be earning interest on that, two, there will be write back of my provision already locked in there.
Q: As of today what is your restructuring pipeline like and in future do you see that trend continuing as well?
A: Let me give you a comparative number. Last quarter when the same question was asked our ballpark number was somewhere around Rs 1700-1800 crore. However, actual restructuring happened for Rs 1212 crore. Within restructured portfolio which is about Rs 12000 crore plus, a small amount of Rs 240 crore which is comprising within Rs 1738 crore got in to NPA.
Current quarter Q4, our rough numbers indicate that restructuring could be somewhere Rs 1500-1600 crore. However, as past says we take very bullishly these numbers but the actual numbers which gets restructured is much lesser; two thirds of that.
Q: Could you help us with the breakup of your provisions and your recovery this quarter, would that also continue in the next quarter and the next financial year?
A: During this quarter if I look at, cash recovery was Rs 358 crore which was in previous quarter Rs 183 crore. So, year-on-year (YoY) if you look at cash recovery it was Rs 183 crore in December 2013 quarter which has gone up to Rs 358 crore in December 2014 quarter that is Q3.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
