Union Bank of India (UNIONBANK) Q4 04/05 earnings summary

Executive summary

• Total business crossed Rs.1 lakh crore, reaching Rs.102,934 crore at 31 Mar 2005, up 27.11% YoY; net profit was Rs.719 crore, up 0.98%.

• Strong loan growth and higher fee income lifted net interest income and operating income, while investment-related depreciation and lower securities-sale gains weighed on earnings.

Financial highlights

• Total income rose 7.28% to Rs.5,736 crore; interest income increased 10.05% to Rs.4,970 crore and interest expense rose 4.50% to Rs.2,905 crore.

• Net interest income grew 18.95% to Rs.2,065 crore; net operating income increased 10.28% to Rs.2,831 crore.

• Operating profit increased 6.07% to Rs.1,573 crore; provisions and contingencies rose 44.95% to Rs.961 crore, and profit before tax fell 25.37% to Rs.612 crore.

• Net profit was Rs.719 crore versus Rs.712 crore; EPS was Rs.15.64, and the board recommended a 35% total dividend, including the 20% interim dividend already paid.

Outlook and guidance

• Management cited a favorable domestic growth backdrop: FY04-05 real GDP growth estimated at 6.9%, with industrial and services growth of 8.3% and 8.6%, respectively.

• For FY05-06, market borrowing by the Government was estimated at Rs.103,791 crore versus Rs.45,943 crore in the prior year; no earnings or business targets were stated.