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Last Updated : Aug 02, 2019 09:20 PM IST | Source: Moneycontrol.com

Union Bank of India to raise Rs 3,000 crore via QIP in Q3

The state-owned bank will take the Qualified Institutional Placement (QIP) route for fund raising and has started the process of shortlisting advisors, the bank’s MD and CEO Rajkiran Rai G said on August 2.

Parnika Sokhi @ParnikaSokhi
 
 
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Mumbai-based Union Bank of India plans to raise Rs 2,000-3,000 crore equity in the October-December quarter this financial year to boost capital adequacy and support credit growth.


The bank’s capital adequacy ratio stood at 11.43 percent, with Tier-1 at 9.27 percent and Common Equity Tier-1 ratio at 7.87 percent, as of June 30.


The state-owned bank will take the Qualified Institutional Placement (QIP) route for fund raising and has started the process of shortlisting advisors, the bank’s MD and CEO Rajkiran Rai G said on August 2.


On June 28, the bank obtained shareholder approval to raise Rs 4,900 crore equity this financial year. Additionally, the bank also looks to monetizing Rs 250 crore worth of non-core investments. It has not approached the government for any capital infusion yet, Rai said.


Union Bank of India expects recoveries of around Rs 9,000 crore this financial year. These include Rs 3,000 crore from 10 accounts that are currently admitted to the National Company Law Tribunal (NCLT). The bank had Rs 26,000 crore worth of accounts under NCLT at the end of first quarter.


The bank has set a target of 12 percent for gross non-performing assets (NPA) ratio and 6 percent for net NPA ratio for 2019-20. For the April-June quarter, its gross NPA ratio was at 15.18 percent and net NPA ratio was 7.23 percent.


Rai said that the bank expects a credit growth of 9-11 percent and net interest margins (NIMs) at 2.4 percent by March 2020. In the first quarter, the bank’s global NIMs stood at 2.12 percent, lower than 2.23 percent in the same period last year.


He also said that deposit rates may further fall by 25-30 basis points, while lending rates are set to ease by 15-20 basis points going ahead.



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First Published on Aug 2, 2019 09:14 pm
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