United Bank posts rise in net profit; bad loans inch up to peak levels

Kolkata-based United Bank of India doesn’t seem to have anyimmediate respite from the bad loans, which has been haunting the bank for last two quarters.

The lender, on Thursday, reported a surge in overall bad loan levels for the quarter ended June, inching close to its December peak levels, but the bank managed to post a growth in net profit for the quarter, although the numbers were hit by a sequential rise in the provisions and weak growth in the net interest income.

Net profit during the quarter rose to Rs 66 crore, up 47 percent, from the year-ago quarter. Gross non-performing assets (NPAs) of the bank, during the quarter, rose to 10.49 percent of loans, compared with 10.47 percent in the preceding quarter.

In the December quarter, United Bank’s NPAs had shot up to 11 percent of loans, while its capital adequacy ratio fell to bare minimum of 9.01 percent inviting lending restrictions from the Reserve Bank of India. The restrictions were later removed after the bank improved its capital adequacy and recovered some of its bad loans.

For the June quarter, United Bank’s capital adequacy, under Basel-III, fell to 9.80 percent from 10.82 percent. The bank made total provisions of Rs 425 core in the quarter, higher compared with Rs 266 crore in the March quarter.

Net interest income of the bank, during the quarter, jumped by a marginal 1.6 percent in the quarter, to Rs 596.45 crore from Rs 587 crore in the year-ago quarter.

The crisis at the United Bank of India had raised major concerns from government and the Reserve Bank of India, leading to the resignation of Archana Bharghava, chairperson of the bank to resign in February this year.

The government is mulling the merger of the bank with a stronger state-run bank to rescue the lender.

Share price of United Bank of India, which had fallen 5.6 percent in the intra-day, recovered following the result announcement to close 5.37 percent up at Rs 47.10 at close, while India’s benchmark equity index, Sensex ended up 0.61 percent at 26076.20 points.