Union Bank of India share price target

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...

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...

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...

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...