Union Bank's net loss widens to Rs 3,370 cr in Q4 on higher provisioning; 'worst is over,' says CEO

Mumbai: State-owned Union Bank of India on Tuesday said its net loss widened to Rs 3,370 crore in the fourth quarter of 2018-19, mainly on account of higher provisioning. The bank had reported a net loss of Rs 2,583 crore for the same quarter previous fiscal. The lender said the Reserve Bank of India (RBI) had pointed out divergence in respect of its provision for NPAs at Rs 27,324 crore for the FY2018 as against Rs 25,044 crore provision reported by the bank. “Due to divergence found by RBI for FY18, the provisions for NPAs increased by Rs 2,280 crore in this quarter. Also, there was provision on account of ageing of NPAs,” the bank’s Managing Director and CEO Rajkiran Rai G told reporters here. The worst for the bank is over and expects healthy growth in the coming quarters, he added. For the full fiscal, the bank reported a net loss at Rs 2,948 crore as against Rs 5,247 crore in FY2018. Domestic net interest margin (NIM) stood at 2.38 percent for the quarter as against 2.23 percent, while global NIM was 2.27 percent. Gross NPA of the bank improved to 14.98 percent from 15.73 percent, while net NPAs stood at 6.85 percent compared to 8.42 percent. [caption id=“attachment_4405623” align=“alignleft” width=“380”]  Representational image. Reuters.[/caption] Rai expects gross NPAs to be below 12 percent and net NPA in the range of 5-6 percent by FY2020. Fresh slippages in the quarter declined to Rs 3,275 crore from Rs 10,043 crore in the same period previous fiscal. The lender has an exposure of Rs 1,100 crore to Infrastructure Leasing and Financial Services (IL&FS), of which Rs 1,000 crore has turned NPA. Rai expects to recover Rs 3,000-3,500 crore from three accounts of RBI’s NCLT list one- Bhushan Power and Steel, Essar Steel and Alok Industries. The lender sold Rs 38 crore of bad loans to asset reconstruction companies in the quarter and Rs 700 crore of NPAs during the full year. The bank is looking to raise Rs 300 crore in FY2020 by selling its stake in NSE, NPCI NSDL, and CCIL, Rai said. Its total deposit grew 1.8 percent to Rs 4,15,915 crore as on 31 March 2019 and advances increased by 7.8 percent to Rs 3,10,932 crore. Rai expects loan growth of 9.11 percent and deposits at 8 percent in the current fiscal. The bank’s scrip ended up 4.21 percent at Rs 79.25 apiece on the BSE Tuesday.