Union Bank of India reported a 10.7% fall in net profit for the quarter ended March 31, 2009, as against a net profit of Rs 521 crore in the corresponding quarter in FY08.
Union Bank of India on Thursday reported a 10.7% fall in net profit for the quarter ended March 31, 2009, as against a net profit of Rs 521 crore in the corresponding quarter in FY08. The decline was due to higher provision for pending wage revision and tax expenses, lagging forecasts. Total income of the company rose to Rs 3,848.73 crore for the quarter under review, from Rs 2,913.10 crore in the same quarter last fiscal. For 2008-09, the company has posted a net profit of Rs 1,726.55 crore, up 24.47% from Rs 1,387.03 crore in the same period last year. The board of directors of the bank proposed a dividend of Rs 5 a piece for FY09.
The bank expects to maintain net interest margin at 3.24% in FY10 on improved spreads in a soft interest rate regime. The bank also plans to cut its lending rates by 25 basis points in July, MV Nair, chairman and managing director, said.
It has plans to raise Rs 200 crore via perpetual bonds in the current quarter to meet its growth requirements, he said. “The headroom in the tier-I segment is Rs 200 crore,” Nair said, adding the bank may need to raise up to Rs 600 crore, during the year to meet growth targets.
The bank is targeting a loan growth of 25% and deposit growth of 23% in FY10.
It is also targeting to bring down its gross non-performing assets (NPA) to less than 1.50% level in the current fiscal, from 1.96% last fiscal.
The bank has made a precautionary provision of Rs 170 crore towards revision of salaries, pending finalisation of wage agreement. Tax expenses also rose to Rs 163 crore, from Rs 4.37 crore a year ago. In FY09, the bank restructured loans worth Rs 2,960 crore.
The bank also plans to enter the mutual funds business by December, in joint venture with Belgium-based company and hopes to receive the market regulator Sebi’s approval by June 30, S Govindan, general manager (personal banking & operations), Union Bank, said.
The state-owned lender has entered into an agreement with Belgium-based KBC Group for the mutual funds JV in November last year. According to the intial agreement, Union Bank will hold a majority 51% stake in the company while the rest will be with KBC Group. Union Bank plans to invest Rs 48.07 crore in the JV while KBC will contribute Rs 64.93 crore, Govindan said.
With PTI inputs.
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