Public sector lender Union Bank of India has reported a net loss of Rs3,369 crore in the January-March quarter of FY19, due mainly to higher operational expenses, and provisions on account of bad loan divergences. The bank had reported a net loss of Rs2,583-crore in the same period last year.
The bank said that the Reserve Bank of India (RBI) has found Rs867 crore divergence in the bank’s gross non-performing asset (NPA) for FY18 and a provisioning divergence of Rs2,281 crore.
"The provision has come because we had diversions of more than Rs2,280 crore from RBI, which is factored in this quarter. There were provision on account of ageing of NPAs," said Rajkiran Rai G, MD and CEO, Union Bank of India.
Operating expenses of the bank rose on a year-on-year basis in Q4 because of a Rs60 crore provision for future wage revisions. The bank also took a hit of Rs140 crore for a 25 per cent discount given to employees on an employee share purchase scheme (ESPS) on 72.8 million equity shares.
However, Union Bank said a Rs667-cre tax writeback in the quarter helped it narrow losses to some extent.
Other income of the bank was down 14.3 per cent year-on-year at Rs1,272 crore. Total income, however, rose 0.3 per cent to Rs9,621 crore in Q4 FY19. The bank’s net interest income rose 18.7 per cent to Rs2,602 crore while its domestic net interest margin (NIM) stood at 2.38 per cent.
The bank expects to recover close to Rs3,000-3,500 crore from the three large accounts - Alok Industries, Essar Steel and Bhushan Power & Steel- that are nearing resolution under the Insolvency and Bankruptcy Code (IBC).
The bank’s asset quality improved in the March quarter as gross bad loans as a percentage of total assets fell 75 basis points to 14.98%. On an absolute basis, gross bad loans fell 1.3 per cent y-o-y to Rs48,729 crore.
Union Bank’s capital adequacy ratio under Basel III rose 32 bps y-o-y to 11.78% in Q4 of FY19.