New Delhi: State-run Union Bank of India on Monday reported a 36% increase in its first quarter profit, aided by higher income from its core operation,lower cost of funds and write back of provisions.
For the quarter ended June 2010, the bank reported a net profit of Rs601 crore against Rs442 crore in the corresponding period last fiscal. Net interest margin (NIM) -- the difference between yields on advances and cost of funds and a key parameter of profitability -- increased to 3.03% against 2.32% a year ago. For the quarter, the bank’s yield on funds was 7.80% against 8.09% a year ago while the cost of funds came down to 4.95% from 6.02% a year ago.
The bank’s chairman and managing director M.V. Nair said NIM would remain at 3% for the entire fiscal year ending March 2011. Total deposits grew 19.18% where the share of low cost current and savings account stood at 32.57% against 30.40% a year ago. Advances grew at 30.72%.
The bank’s gross debt as a percentage of advances rose to 2.19%, up from 1.95% a year ago. After accounting for provisions, bad debt fell to 0.94% from 0.72% in the year-ago period. The bankâ€™s provisions rose to Rs442 crore against Rs345 crore a year ago, largely because of a write back of Rs135 crore in the June quarter last fiscal. .
The bank’s shares close 2.03% lower on Monday to Rs319.30 while the benchmark Sensex closed 0.61% lower at 18,020.05 points.