Union Bank of India (UNIONBANK) Q4 12/13 earnings summary

Executive summary

• FY13 global business rose 17.77% to ₹475,673 crore; deposits grew 18.35% to ₹263,762 crore and advances 17.06% to ₹211,911 crore.

• Net profit increased 20.76% to ₹2,158 crore, while operating profit rose 6.26% to ₹5,583 crore; higher funding costs compressed NIM to 2.96%.

• Growth priorities included customer-focused services, productive-sector lending, financial inclusion, stronger asset quality management and overseas expansion.

Financial highlights

• Total income reached ₹27,677 crore, up 17.89% YoY; NII rose 11.04% to ₹7,543 crore and non-interest income increased 4.24% to ₹2,552 crore.

• Operating profit increased from ₹5,254 crore to ₹5,583 crore; provisions declined 1.22% to ₹3,425 crore and net profit rose from ₹1,787 crore to ₹2,158 crore.

• Total expenses rose 21.25% to ₹22,094 crore; operating expenses grew 13.17% to ₹4,512 crore, including ₹75 crore provision for pending wage revision.

• Interest expense increased 23.51% to ₹17,582 crore as deposit cost rose to 7.38% from 6.93%; cost of funds rose to 6.43% from 6.33%.

• Proposed dividend remained 80%, or ₹8 per ₹10 share; EPS increased to ₹38.93 from ₹34.07.

Outlook and guidance

• FY14 GDP growth was projected at 5.7% by RBI; professional forecasters expected 6.0%, versus estimated FY13 growth of 5.0%.

• Scheduled commercial bank deposits and advances were projected to grow 14% and 15%, respectively; sequential improvement in key performance parameters was noted from Q2 FY13.

• FY14 priorities: increase low-cost deposit share and expand agriculture, retail, micro, medium and small enterprise business; customer centricity remains a core focus.