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Union Bank of India bank saw massive improvement in asset quality with the net non-performing assets ratio in September quarter.  (Photo: Hemant Mishra/Mint)
Union Bank of India bank saw massive improvement in asset quality with the net non-performing assets ratio in September quarter. (Photo: Hemant Mishra/Mint)

Union Bank of India proposes to raise 1,000 crore from bonds

  • The bonds of face value of 10 lakh each, bearing a coupon of 7.18% per annum, will have maturity of 15 years, the bank said
  • The state-owned bank reported a net profit at 517 crore for the quarter ended September

The Union Bank of India on Tuesday said it will raise up to 1,000 crore from bonds to fund business growth. "The bank is issuing Basel III compliant Tier II bonds in the nature of debentures aggregate issue size not exceeding 1,000 crore, with a base issue size of up to 500 crore and a Green Shoe option to retain over subscription up to 500 crore," the lender said in a BSE filing.

The bonds of face value of 10 lakh each, bearing a coupon of 7.18% per annum, will have maturity of 15 years, it said. The bonds have fixed allotment date of 26 November, 2020.

The Basel-III capital regulations are globally accepted banking norms under which banks need to improve and strengthen their capital planning processes.

The state-owned bank reported a net profit at 517 crore for the quarter ended September, against a net loss of 1,194 crore in the year-ago period.

The bank saw massive improvement in asset quality with the net non-performing assets ratio improving by 227 basis points to 4.13 from 6.40 in the year-ago period. Gross NPA ratio improved to 14.71 in the quarter under review from 15.75 in September 2019, leading to lower provisions towards credit losses, the bank management said. The bank made only 3,721 crore in total provisions as against 5,055 crore in the year-ago period.

Net interest income in the latest September quarter rose 6.1% to 6,293 crore. Other income stood at 2,308 crore, which included 1,065 crore of treasury income, 932 crore from sale of assets/ investments and 232 crore recovery from written off assets.

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