Union Bank Loss Widens To ₹3,369 Cr

Weighed down by huge loan-loss provisions, Union Bank of India’s net loss widened to ₹3,369 crore in the fourth quarter ended March 31, 2019, against ₹2,583 crore in the year-ago period.

The bank said it has reached the peak of provisioning requirements, and the reverse cycle will start.

Loan-loss provisions in the reporting quarter increased to ₹5,783 crore (₹5,639 crore in the year-ago quarter).

This includes ₹2,281 crore of additional provisions made on account of divergence in provisioning flagged by the Reserve Bank of India for FY2018. Due to the increased provisions, the public sector bank’s provision coverage ratio improved to 66.24 per cent as of March-end 2019, against ₹57.16 per cent as of March-end 2018.

Correspondingly, net non-performing assets (NNPAs) declined to 6.85 per cent of net advances (from 8.42 per cent as of March-end 2018).

Slippages during the quarter were lower at ₹3,275 crore (₹10,043 crore in the year-ago quarter).

This includes an exposure of ₹885 crore to IL&FS Group’s thermal power plant.

“If you take the divergence provisioning out, we have already turned around. For the last three quarters, we had posted decent profits. Because the divergence (provisioning) had to be factored in during this quarter, that has put us back by that amount.

“But now, I think, the worst is behind us….we don’t see any major provisioning hits now onwards,” said Rajkiran Rai G, MD and CEO, Union Bank of India.

In FY2020, Union Bank expects credit growth of 9-11 per cent (3.7 per cent in FY2019) and deposit growth of  8 per cent (2.7 per cent).

The bank’s chief said  gross NPA (GNPA) should be below 12 per cent (14.98 per cent in FY2019) and NNPA  between 5-6 per cent (6.85 per cent).