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Provisions, tax expenses eat into Union Bank of India fiscal Q1 profit

Union Bank of India's net profit for the quarter ended June 30 dropped year over year as provisions and tax expenses surged.

The bank said net profit for the fiscal first quarter fell to 1.17 billion Indian rupees, or 1.70 rupees per share, from 1.66 billion rupees, or 2.42 rupees per share, in the prior-year period.

Net interest income rose to 22.43 billion rupees from 21.03 billion rupees. The bank's domestic net interest margin fell to 2.20% from 2.36% in the year-ago period. The global NIM came in at 2.06%, compared with 2.27% for the previous quarter and 2.28% for the quarter ended June 30, 2016.

Provisions for nonperforming loans jumped to 18.76 billion rupees from 13.47 billion rupees, while tax expenses more than doubled to 2.36 billion rupees from 1.06 billion rupees in the year-ago quarter.

The bank said interest earned increased to 81.53 billion rupees from 78.77 billion rupees, while income on investments rose to 21.48 billion rupees from 18.77 billion rupees.

The bank's gross nonperforming asset ratio as of June 30 rose to 12.63% from 11.17% as of March 31 and 10.16% as of June 30, 2016. Net NPA ratio climbed to 7.47% from 6.57% at the end of the previous quarter and 6.16% at the end of the prior-year period.

As of June 30, the bank's capital adequacy ratio under Basel III stood at 12.01%, up from 11.79% a quarter earlier and from 10.75% a year earlier. Common equity Tier 1 ratio and additional Tier 1 ratio clocked in at 7.73% and 1.51% respectively, compared with 8.24% and 0.15% in the year-ago quarter.

As of Aug. 9, US$1 was equivalent to 63.86 Indian rupees.