Union Bank of India (UNIONBANK) Q4 06/07 earnings summary

Executive summary

• Total business reached ₹148,838 crore at March 31, 2007, up 15.61% YoY; net profit rose 25.19% to ₹845 crore.

• Growth focused on agriculture, SME and retail lending, while stronger recoveries lowered NPAs and improved asset quality.

Financial highlights

• Total income rose 26.91% to ₹8,069 crore; interest income increased 25.89% to ₹7,382 crore and other income rose 39.07% to ₹687 crore.

• Net interest income increased 17.47% to ₹2,790 crore; operating profit grew 36.49% to ₹2,001 crore.

• Profit before tax rose 54.36% to ₹1,380 crore; net profit increased 25.19% to ₹845 crore despite provisions and contingencies of ₹1,156 crore.

• Deposits grew 14.96% to ₹85,180 crore and advances rose 16.50% to ₹63,658 crore; low-cost deposits reached 34.50% of deposits, up 214 bps.

• Reported other income included investment-sale profit of ₹109 crore less ₹155 crore HTM premium amortisation, resulting in a net ₹46 crore loss.

Outlook and guidance

• 2007-08 priorities included opening 22 additional retail loan processing centres and advancing Basel II implementation ahead of the applicable RBI deadline.

• Overseas expansion plans included representative offices in China and Abu Dhabi and proposed branches in Hong Kong and Doha, subject to regulatory approvals.

• Management cited inflation, rising interest rates and tighter liquidity as operating pressures; RBI’s CRR increases absorbed an estimated ₹43,000 crore from banking-system resources.