Union Bank of India shares gain 7% as net profit rises in Q3, asset quality improves

Union Bank of India shares are down nearly 10 percent year-to-date.

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Shares of Union Bank of India surged 7 percent on January 28, buoyed by a spike in the company's net profit for the December quarter along with improvement in its asset quality.

The lender reported a 28.2 percent on-year growth in its net profit at Rs 4,603.6 crore for the third quarter of FY25, up from Rs 3,589.90 crore in the same period last fiscal. The profit growth was led by lower provisions and higher-than-expected other income.

Other income grew 17 percent on year to Rs 4,420 crore, thereby lifting total income by 5.5 percent to Rs 13,660 crore.

At 10.30 am, shares of Union Bank of India were trading at Rs 109.24 on the NSE.

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Net interest income (NII) — the difference between a bank's interest income from lending and the interest it pays to depositors — rose by 0.8 percent to Rs 9,240.2 crore, compared to Rs 9,168 crore in the same quarter of FY24.

Asset quality also improved as the gross non-performing asset (GNPA) ratio eased to 3.85 percent in the December quarter, down from 4.36 percent in the September quarter, while the net NPA ratio declined to 0.82 percent from 0.98 percent on a sequential basis.

Meanwhile, business growth remained modest, with advances growing 6.7 percent year-on-year  and 2.6 percent on-quarter to Rs 9.2 lakh crore. The retail loan book grew by 16.4 percent on year while the commercial book expanded by 4.3 percent.

Deposits rose by 3.8 percent on year but fell 2 percent sequentially, leading to an increase in the credit-deposit (CD) ratio to 75.6 percent. The CASA (Credit Account Savings Account) ratio also improved by 71 basis points on a sequential basis to 33.4 percent.

Looking ahead, investors await the lender's post-earnings call, scheduled later today, to get more insights over the lender's future growth trajectory. Analysts will also be on the lookout for any growth guidance that the company's management may have to offer.

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