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Union Bank to raise Rs15 bn in FY10

Union Bank to raise Rs15 bn in FY10
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First Published: Thu, Jul 23 2009. 06 03 PM IST
Updated: Thu, Jul 23 2009. 06 03 PM IST
Mumbai: State-run Union Bank of India (UBI) plans to raise Rs15 billion through tier II capital in the year to March 2010 to support business growth, a top official said on Thursday.
“We will raise the money in different periods of the year as and when the market is conducive,” M.V. Nair, chairman and managing director, said at a media briefing.
It is also targetting a net interest margin of 3% for the fiscal, up from 2.29% now, he said.
“Substantial portion of the high cost deposits will mature in the second and third quarter resulting in repricing of deposits,” Nair said, adding, this together with improved credit offtake, would improve margins by the year end.
The Mumbai-based lender also expects loans to rise 25% in 2009-10 with demand picking up in the second half of the year.
“We are seeing loan growth in all sectors,” he said. Lending to medium businesses, agriculture and retail would help in boosting growth, he added. Earlier in the day, the state-run lender had posted a market beating 94% surge in June-quarter net profit to Rs4.42 billion, helped by rise in non-interest income.
A Reuters estimate by analysts had projected net profit at Rs3.43 billion during the quarter.
Non-interest income rose 117% to Rs5.29 billion led by rise in fee-income and profits from treasury operations.
The net interest income was flat at Rs8.01 billion. “Starting next quarter, we expect to see increase in interest income with loan growth picking up and excess liquidity being disbursed to different sectors,” Nair said.
“Investors were concerned as results were boosted by non-interest income, which is unsustainable in the long run,” an analyst with India Infoline said on condition of anonymity.
Shares in the bank ended 4.75% down at Rs246.60 in the stockmarket that rose 2.61%.
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First Published: Thu, Jul 23 2009. 06 03 PM IST