Higher provisioning brings down United Bank of India’s net profit by 79%
By Joseph Samson
May 15, 2013
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The public sector lender, United Bank of India has posted a decline in its net profit by 79 per cent to Rs 31 crore in the quarter ended March 31, 2013 because of higher provisioning for bad loans.

"The drop in net profit is on account of a rise in provisioning. Had we made lesser provisions then the profits would have looked better, but our aim was to strengthen the balance-sheet," said Mrs. Archana Bhargava, Chairperson and Managing Director of United Bank of India.

Provisions increased by 147 per cent to Rs 759 crore, of which, the cover for non-performing assets (NPA) was nearly Rs 338 crore.

Slippages during the fourth quarter increased by 79 per cent to Rs 1,057 crore. "Much of these slippages were from large industry sectors such as aviation, steel, power, telecom and textiles," Mrs. Bhargava said.

Gross NPA grew to 4.25 per cent (against 3.41 per cent), and net NPAs, to 2.87 per cent (against 1.72 per cent). The bank aims to bring down gross NPA to 2 per cent by the end of this fiscal.

The decline in net interest income was on account of interest reversals on bad loans and reduced interest earned on restructured accounts, Mrs. Bhargava said.

Net interest margin also declined to 2.67 per cent (against 3.11 per cent).

This financial year, United Bank of India aims to achieve 18 per cent growth in business, to Rs 2-lakh crore.

"We plan to upgrade our representative offices in Bangladesh and Myanmar into full-fledged branches. We also plan to foray into one of the South African countries. We will need capital for this," Mrs. Bhargava added.


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