Union Bank Q2 net profit up 30% as margins improve
IANSTotal advances in the September quarter increased 19% year-on-year to ₹11.6 lakh crore, led by a 17% growth in domestic advances, which was supported by a 24% increase in corporate advances to ₹5.2 lakh crore. The bank has a corporate loan pipeline of ₹1 lakh crore.
Net interest margin (NIM), or the difference between the yield earned on loans and that paid for deposits without taking into account tax refund gains, in the September quarter improved to 2.9% from 2.7% a year ago.
Chief executive officer Asheesh Pandey said the bank aims to improve NIM beyond 3% by next fiscal year. "We have started building up from when rates were on the way down. Now that the trajectory has changed and the repo rate has been hiked by 25 basis points, we expect to further improve margins," Pandey said.
The bank collected $2.3 billion through FCNR (B) deposits, about 70% of which was through loans offered to customers. Pandey said the bank has enough provision buffer with a coverage ratio of above 95% and has further added ₹200 crore to the provision kitty this quarter. Net non-performing assets (NPAs) during the quarter stood at 0.4% compared with 0.6% a year ago.