Union Bank posts Q4 loss of Rs2,583 crore

Mumbai: Union Bank of India on Thursday posted a loss for a third straight quarter as the lender made higher provisions to cover losses on its loan and bond portfolios as well as changes in calculation of employee gratuity.

Loss stood at Rs2,583.38 crore for the three months ended 31 March, compared with a profit of Rs108.24 crore a year earlier. The loss was higher than the Rs1,203 crore estimated by analysts in a Bloomberg survey. 

Union Bank did not avail dispensation given by the Reserve Bank of India (RBI) to spread the so-called mark-to-market provisioning on bond portfolio and for gratuity expenses, Rajkiran Rai G., managing director and chief executive, said in a post results press conference. 

The lender also did not avail regulatory forbearance of lower provisioning for accounts referred under the Insolvency and Bankruptcy Code (IBC), he added.

In the March quarter, total provisions and contingencies rose nearly 132% year-on-year (y-o-y) to Rs5,668 crore. In the December quarter, provisions were Rs3,254 crore. 

Loan slippages during the quarter stood at Rs10,043 crore. Accordingly, total gross non-performing loans rose to Rs49,370 crore at March-end from Rs40,988 crore in the December quarter and Rs33,712 crore in the year-ago period.

Rai said that at least 50% of the slippages in the March quarter were due to the 12 February circular of the RBI whereby it withdrew a host of restructuring schemes and set a 180-day timeline for resolving stressed loans.

The bank’s gross bad loan ratio as a percentage of total loans rose to 15.7% as at the end of March from 11.2% a year ago. 

According to Rai, the pain on asset quality in the near-term is likely to remain as recognition of stressed loan continues. While recognition of large credit exposure is nearly complete, loans worth Rs3,000-4,000 crore in the thermal power sector are at the risk, he added. 

Rai said in the coming months the focus of the bank will be on recoveries and resolution of accounts that were part of RBI’s first list and is expected to yield good results. 

Union Bank of India has exposure to 27 accounts, part of the first and second lists of the RBI, referred to IBC with an outstanding of Rs12,129 crore. The bank has 60% provisioning on these accounts.