Union Bank’s PAT Surges by 108% Y-O-Y on the Back of Strong Loan Growth in 2023

Union Bank’s PAT Surges by 108% Y-O-Y on the Back of Strong Loan Growth in 2023

In the quarter under examination, the state-owned bank saw improved asset quality.

During the April–June quarter, Union Bank of India reported a 108% year–over–year (y–o–y) increase in net profit thanks to robust loan growth and improved asset quality. In the quarter under review, the bank reported a net profit of Rs 3,236 crore, an increase of 16% over the previous quarter.

A boost in technological advancements, particularly in the retail, agricultural, and micro, small, and medium-sized businesses (RAM) sectors, helped the bottom line.

As of June 30, RAM advances increased 14.9% yearly to Rs 4.4 trillion. Retail loans increased separately by 16.5% yearly to Rs 1.6 trillion as of June 30. As of June 30, total domestic advances increased 11.8% yearly to Rs 7.9 trillion. Similarly, as of June 30, worldwide advances increased 12.3% yearly to $8.2 trillion. To Rs 11.3 trillion, total deposits increased 13.6% year over year.

The difference between interest generated and interest paid, or net interest income, increased 16.6% yearly to Rs 8,840 crore in the quarter. As of June 30, total deposits increased 13.6% yearly to Rs 11.3 trillion.

Low-cost current account savings account (CASA) deposits increased by 7.2% yearly, although retail term deposits under Rs 2 crore decreased by 0.6%. The CASA ratio decreased from 36.20% a year ago to 34.60% as of June 30.

In the June quarter, the bank’s net interest margin increased to 3.13% from 3% a year earlier. From January to March, it was at 2.98%.

In the quarter under examination, the state-owned bank saw improved asset quality. As of June 30, the gross non-performing asset ratio decreased from 10.2% to 7.3%. As of June 30, the net non-performing asset ratio decreased from 3.31% to 1.58%.

As of June 30, credit cost was down from 2.02% to 0.97%. Additionally, the bank’s capital increased, with the standard equity tier-1 ratio rising to 12.34% as of June 30 from 10.68% a year earlier.

Union Bank, a prominent financial institution, posted an impressive growth of 108% year-on-year (y-o-y) in Profit After Tax (PAT) for 2023, attributing this phenomenal rise to robust loan growth.

The banking giant announced that its PAT climbed to a staggering 108% y-o-y, a testament to its sound financial management and dynamic strategic planning. This growth came amidst a period of economic uncertainty and challenges posed by the lingering pandemic, demonstrating the resilience and adaptability of the bank.

The significant increase in Union Bank’s PAT is mainly attributed to solid loan growth throughout the year. The bank’s robust credit policy, focus on customer-centric services, and diverse loan portfolio have been vital in this development.

The bank has recorded a steady increase in the demand for retail and corporate loans, resulting in higher net interest income. Additionally, the expansion of digital platforms and easy access to credit has driven consumer borrowing, contributing to solid loan growth.

In the retail sector, there has been a marked rise in demand for home loans, automobile loans, and personal loans. This has been driven by the easing of lockdown restrictions, low-interest rates and the bank’s aggressive marketing strategy.

On the corporate front, Union Bank has extended its services to various new enterprises while deepening relationships with existing clients. The bank’s customized loan solutions and quick processing times have attracted Small and Medium Enterprises (SMEs), further propelling loan growth.

While the bank has reported strong loan growth, it has also emphasized risk management to ensure asset quality. Union Bank has continued to improve its underwriting standards and collection efficiency to maintain a low and stable Non-Performing Assets (NPA) ratio. The prudent risk management strategies have supported the bank in delivering healthy and sustainable profitability.

The bank has expressed confidence in its continued growth trajectory. In its financial report, Union Bank stated that it remains committed to leveraging the ongoing economic recovery by expanding its product portfolio, enhancing its digital platforms, and optimizing its business processes. The financial institution has also emphasized its focus on maintaining a solid balance sheet, risk management and providing quality services to its customers.

Union Bank’s impressive PAT growth, supported by solid loan growth, has underscored the strength of its financial position and strategic initiatives. As the bank navigates through the shifting economic landscape, its commitment to customer-centric services, robust risk management, and digital transformation will be vital to sustaining this growth momentum.

 This development also underscores the role of lending activity in driving banking institutions’ profitability, highlighting the need for a balanced and diversified loan portfolio.

In the future, it will be interesting to observe how Union Bank maintains this balance while scaling up its operations and responding to changes in the market landscape.