Union Bank of India Reports 30.3% Profit Surge in Q2

Union Bank of India announced a remarkable net profit of ₹5,537 crore for the second quarter of the fiscal year, marking a 30.3% increase compared to ₹4,249 crore during the same period last year. This growth has positively impacted the bank's stock performance, with shares rising by up to 4% on October 19, reflecting investor confidence in the lender's financial health.

The bank's core income, measured as Net Interest Income (NII), also showed a robust increase of 20.1%, reaching ₹10,583 crore compared to ₹8,812 crore in the previous year. This growth in income is attributed to improved lending practices and a focus on enhancing asset quality, which has been a significant concern for many banks in the current economic climate.

In terms of asset quality, Union Bank reported a sequential improvement in its gross Non-Performing Assets (NPA), which decreased to 2.42% from 2.65% in June. The net NPA also saw a decline, dropping to 0.42% from 0.47% in the previous quarter. In absolute figures, the gross NPA stood at ₹27,916 crore, down from ₹29,092 crore, while the net NPA was reported at ₹4,768 crore, a reduction from ₹5,016 crore.

The bank's provisions for bad loans decreased significantly to ₹700 crore from ₹979 crore in the previous quarter, contributing to the overall profitability. Operating profit rose by 19% year-on-year, reaching ₹8,108 crore, compared to ₹6,814 crore last year. Additionally, fresh slippages in loans fell to ₹1,856 crore from ₹2,062 crore, indicating improved recovery efforts, with recoveries reported at ₹1,226 crore, up from ₹913 crore.

Looking ahead, Union Bank's shares are currently trading at ₹178, reflecting a 3.7% increase on the day of the announcement and a total rise of 16% for the year. The bank's management is optimistic about maintaining this growth trajectory, with ongoing efforts to enhance asset quality and profitability in the upcoming quarters.