Mumbai: State-run Union Bank of India on Thursday said it planned to cut its base rate, or minimum lending rate, by 25 basis points (bps), prompted by the Reserve Bank of India (RBI) reducing its key lending rate. The bank also announced a 53.5% jump in net profit for the December quarter as its stock rose 5.81%.
The bank will cut the base rate to 10.25% effective 9 February joining other lenders that have done so. On Tuesday, the RBI cut its key lending rate and the cash reserve ratio (CRR) by a quarter percentage point each.
Earlier on Thursday, state-owned Punjab National Bank cut its base rate to 10.25% from 10.5% effective 9 February.
Union Bank refrained from cutting its deposit rate, but indicated that it could do so soon.
“Savings deposit growth is not as per expectation, hence we are hesitant in changing the deposit rate. Maybe in due course we will adjust different maturity basket of deposits,” Union Bank chairman and managing director D. Sarkar told reporters in Mumbai.
The rate cut came on the day the bank announced a rise in net profit to Rs.302.40 crore in the quarter ended December from Rs.197 crore a year earlier. Total income increased to Rs.6,959.37 crore from Rs.5,966.82 crore, it said in a filing to the BSE.
Net interest margin, a gauge of profitability, narrowed to 2.95% from 3.20%. Net interest income rose 9.88% to Rs.1,891 crore from Rs.1,721 crore. In the nine months ended December, net profit rose to Rs.1,368.55 crore from Rs.1,013.94 crore a year ago.
The stock ended at Rs.255.10 on BSE. The Sensex dropped 0.55% to 19,894.98 points.