Benefit from revival in PSU Banks: With the government focusing on reviving growth in the economy, PSU Banks will have to play a key role in jumpstarting infrastructure and capital intensive industries. This is likely to result in consolidation and pushing up reforms in this space.

The bank reported a net loss of Rs3,369cr in the current quarter, Union bank of India (UBI) provides various mainly on account of more than 3x increase in provisions sequentially. banking products and services through four With an improvement in NIM, the net interest income (interest income segments, namely, Treasury Operations, Corporate less interest expense), has grown by 18% YoY to reach Rs2,602 cr. Muted growth in loans and advance by 3.7% YoY, led by retail, agriculture and MSME loans, while the deposits have witnessed a growth of 1.8% YoY, with CASA mix improving 140bps YoY to 34.7%....

Slippages of Rs32.7bn continued to be at higher rate and from all sectors Union Bank posted loss of Rs33.6bn of PAT (v/s PLe of Rs1.7bn loss) on back of making higher provisions from RBI's divergence report (Rs22.8bn) and ageing of NPA helping improve PCR to 58.3% from 51.4% in Q3FY19. We have been mentioning that bank remains under provided on provisions and lags amongst banking peers (partly also on delayed recognitions) and hence going ahead will continue to see higher provisions (enhancing PCR) keeping...

Deposits grew by 2.2% (YoY) with CASA portfolio registering a growth of ~5.5% during the same period. GNPA & NNPA decreased by 8bps and 85bps at 15.7%& 8.4% resp....

Union Bank of India Q2FY19 results Comment NII fell to Rs. 2493.12 Cr in Q2FY19 compared to Rs. 2626.12 Cr in Q1FY19. NII rose by 7.43% ( Rs. 172.39 Cr ) when compared with the same period last year

Union Bank of India operates through over 4200+ branches across the country. The Bank has a large clientele base of over 49m.The retail, agriculture and MSME-Micro Small Medium Enterprises (RAM) sectors comprises about ~55% of domestic loan book (as of Q4FY18). Reported a net loss of 2583crs in Q4FY18 on account of one off provisions and investment depreciation. Both NII and NIM de- grew by 8% & 37bps on a YoY basis. Advances/Deposits grew by 4%/8%yoy with CASA portfolio registering a growth of ~7% yoy. GNPA/NNPA is up by 456bps and 185bps YoY to 15.7% and 8.4% respectively while Cost to Income ratio reflected a deterioration on a YoY basis (49% vs 44%)....

NII decreased to Rs. 2193.07 Cr in Q4FY18 compared to Rs. 2548.26 Cr in Q3FY18. Union Bank of India Q4FY18 results Comment

NII declined 14%/8% QoQ/YoY, majorly due to interest income reversal of INR4.4b. This was partly offset by interest on IT refund of INR4.5b (booked in other income). Domestic/global NIM came in at 1.99%/1.9% (v/s 2.34%/2.23% in 3QFY18). Muted trading gains of INR1.3b (-77% YoY) led to just 3% growth in other income. Opex grew 5% YoY, taking the CI ratio to 48.6%. The bank up-fronted gratuity provisions in the quarter. Slippages came in at INR100.4b (INR41.9b in 3QFY18), with a spike in corporate slippages (INR7.9b v/s INR3.4b in 3Q). The bank reported FY17...

Union Bank reported a massive loss of Rs25.8bn (PLe: 4.5bn loss) on back of RBI's revised framework where it recognized very high slippages of Rs100.4bn (3.4% of loans) of which Rs6570bn were from the existing stressed pool but balance were fromSME/Agri/Retailwhichwereveryhighaswell.Dispensationpoolislowerthan <2.0%loansnow,butcertainstandardpowerassetsofRs50.0bnareinSMA0/1pool andRs87.2bninSMA2(3.0%ofloans)ofwhichonlyRs18.0bniscorporate&restin others, which is discomforting. Management guidance on stress also does not conspireconfidence,butcontinuedpledgetokeepupthePCR,remainsapositivebut...

Though recapitalisation of Rs45.2bn to UBI announced by the Government of India is long-term positive, it may further negatively impact its book value (as dilution in at discount to current book) and RoE in the immediate term. We expect UBI's credit cost to rise in the medium term, which will adversely impact its earnings over next 2-3 quarters. Thus, the Bank is expected to witness elevated level of credit cost, which will keep its earnings and return ratios subdued over next 3-6 quarters. Hence, we maintain our HOLD recommendation on the stock with a...

and slightly higher opex, although NII growth was better on back of lower cost of funds and despite high interest reversals. Bank got divergence of Rs18bn on NPAs withRBIandhencehadrecognizesomeremainingNPAsthisquarterandabout30% were recognized in H1FY18. Key positive for Union bank was upfronting of provisioning on the second list of Rs9.9bn leading to better PCR of 50.2% (without technicalw.offs)andhencerequiringslightlylowerprovisionsgoingahead.Bankhas been consistently growing its loan book at 1012% with lower RWA growth but capital still remain most constrained for the bank. We continue retain our REDUCE...

UNBK reported a loss of INR12.5b. PPoP growth of -15%/-11% QoQ/YoY was nullified by elevated provisions of INR32.5b (8% QoQ decline) as the bank provided INR9.9b towards the NCLT 2nd list in advance, thereby taking care of all provisioning needed towards these accounts by FY18. Provisions also included INR481m of additional provisions towards standard accounts in telecom and power sector. NII growth picked up on a moderate base to 19% YoY to INR25.5b, even with an interest reversal of INR3.8b. Domestic/Global NIM came in at2.34%/2.12% (2.19%/2.08% in 2QFY18). Muted trading gains of (INR60mcompared to INR4.8b in 2Q) led to 35% YoY decline in in other income.

UBI is one of the most capital-starved public sector banks. Its CET1 stood at 7% in Sep'17, which is barely few bps above minimum regulatory requirement. We expect the Bank can be one of the major beneficiaries of recently announced mega PSB recapitalisation plan, as higher recapitalisation will help the Bank to come out of the capital insufficiency situation and return strongly on the growth path. However, the Bank may continue to witness elevated level of credit cost, which may keep its earnings and return ratios subdued over next 3-6 quarters. Hence, we continue to maintain our HOLD recommendation on the stock with an unrevised Target...

go and not taking dispensation till Mar19. Bank has another Rs10.0bn of provisioningshortfallfromthesecondlistwhichwillkeepcreditcosthigh.Wehave beenhighlightingUNBK'sPCRremainsoneofthelowestamonglargePSBsandwith GNPAs provisioning requirement remaining high which has also been adding to capital constraints. One positive has been, despite loan growth of 910% YoY bank has grown RWAs by ~3.5% YoY which is commendable but other metrics remain static. We revise our PT to Rs142 (from Rs133) and downgrade to REDUCE as high...

reversals on SDR/S4A accounts. Domestic/Global NIM came in at 2.19%/2.08% (2.20%/2.06% in 1QFY18). Trading gains of INR4.8b (37% of other income) led to 7% growth in other income. Gross slippages moderated to INR26.9b (4.1% slippage ratio) vs INR44.5b last quarter, while recoveries and upgrades were subdued at INR5.8b, leading to net slippage ratio of 3.03% (5.8% in 1Q). Total pool of NSL (NNPL + OSRL + other stressed loans) increased to INR353.8b (12.2% of advances) on a sluggish loan book. Agri slippages moderated to INR4.2b (INR6.9b in 1Q). 5...

(GNPA) ratio declined 28 bps q-o-q to 12.35%, while net NPA ratio stood at 6.70% versus 7.47% in the previous quarter. Addition of stressed assets during Q2FY2018 was lower as accounts worth Rs. 2,686 crore turned NPAs as against Rs. 4,453 crore in the previous quarter. The bank has undertaken 5:25 restructuring in accounts worth Rs. 174 crore, strategic debt restructuring (SDR)...

Union Bank of India Q1FY18 results comment NII fell to Rs. 2242.6 Cr in Q1FY18 compared to Rs. 2387.03 Cr in Q4FY17.

NII growth of 3.5% yoy and -2.1% qoq was impacted due to contraction in NIMs which declined 9 bps yoy and 13 bps qoq to 2.1%. NIM contraction was partially driven by decline in yields which were down 73 bps yoy to 8.2% for the quarter. Another reason for NIM contraction was decline in credit/deposit ratio which stood at 74.1% (vs. 75.8% for Q1FY17 and 75.7% for Q4FY17). Employee costs during the quarter have declined 4.4% yoy and 1.8% qoq, while other expenses have increased by 18.4% qoq, down 9.6% qoq. Overall cost/income ratio stood at 43.8%, down 451 bps yoy and 55 bps qoq. We attributed most of the improvement in C/I ratio on yoy basis to strong growth in non-interest income. As a result, operating profit grew 26.6% yoy (down 3.6% qoq). PBT stood at Rs. 3529 mn, up 29.7% yoy. The bank was loss-making at PBT level during Q4FY17. Due to non-uniform effective tax rate, we believe periodic performance at PAT level is not comparable....

NII rose to Rs. 2387.03 Cr in Q4FY17 compared to Rs. 2136.62 Cr in Q3FY17.

Union Bank's Q4FY17 net income disappointed on back of high provisions though there was a tax write back. Operating performance was tad better on back of reducedcostoffundshelpingNII,betterfeeincNIIomeandloweropex.Slippageshas beentrendingdownwardsandremainedlowerthanexpectation(Rs29.5bnv/sRs32 35bnrangefromlast3quarters)helpingassetqualityimprovemarginallybuthigher writeoffhaveimpactdthenetincome.Lowertrendofslippages&negligibleinterest reversalsinFY18shouldhelpprofitrecoverygoingforward,whilelowercapitalbase remains a key overhang (CETI of 7.7% with no dividend) and holds us from...