Union Bank of India's provisions and contingencies fell sharply by 60.7 percent sequentially to Rs 2,229 crore, but increased 30.8 percent YoY in Q1.
Public sector lender Union Bank of India has reported a 11.2 percent growth year-on-year in first quarter profit to Rs 129.5 crore, driven by tax credit and net interest income.
Profit in same period last fiscal was Rs 116.5 crore.
Net interest income during the quarter grew by 17.1 percent to Rs 2,626.2 crore compared to Rs 2,242.6 crore in year-ago with loan growth at 5 percent.
Asset quality weakened for the quarter with gross non-performing assets as a percentage of gross advances rising to 16 percent versus 15.7 percent and net NPA increasing to 8.7 percent versus 8.4 percent sequentially.
In absolute terms, gross NPA increased 3.2 percent quarter-on-quarter to Rs 50,972.6 crore and net NPA 4.9 percent to Rs 25,508.4 crore for quarter ended June 2018.
Provisions and contingencies fell sharply by 60.7 percent sequentially to Rs 2,229 crore, but increased 30.8 percent YoY in Q1.
Other income (non-interest income) dropped 14.6 percent YoY to Rs 1,207.95 crore while operating profit increased 1.56 percent to Rs 2,088.78 crore in June quarter.
Tax credit for the quarter stood at Rs 269.83 crore against tax expenses of Rs 236.30 crore in same period last fiscal.
"This profit is sustainable. We can't be too aggressive on challenges and not be too conservative when it comes to opportunities," Rajkiran Rai G, CEO and Managing Director of Union Bank of India, told media persons in the post-results conference.
The public sector bank fully provided the mark-to-market losses from the treasury income, which came in lower by 63 percent.
On NPAs, Rai said, "This is the highest number we could have as large corporate (stress) recognition is complete."
Union Bank will also look at unlocking value of Rs 360 crore from its non-core assets.The stock price closed at Rs 85.45, down Rs 3.65, or 4.10 percent on the BSE.