Union Bank of India share price target

UNBKs results were a mixed bag with better than estimated earnings and elevated stress additions. Net earnings grew 77% ( 27% ahead of estimates), led by higher treasury gains and provisions write-back in the restructured assets. Gross stress addition was marginally higher at Rs 23bn because of elevated slippages of Rs 19bn.

Loanbook growth remained weak (+3% yoy) due to fall in corporate (6%) and SME loans (3%). Retail loan book grew 18% while agri was up 26%. Overseas loans which contribute10%ofadvancesgrew34%yoy....

Asset quality continues to remain under pressure Union Bank of India (UBI) reported its 2QFY16 profits ahead of both our and street estimates driven by lower provision and higher treasury income. Provision expenses declined 32.7% qoq to Rs4.3bn led by reversal of MTM provision on AFS portfolio during the quarter. Treasury income grew by 245.3% yoy and 32.8% qoq to Rs2.6bn as the bank took advantage of declining yield in GSec market. Fresh slippages increased sequentially to Rs19.3bn (slippage ratio of 3.1%) v/s Rs15.1bn (slippage ratio of 2.4%) in 1QFY16 and Rs19.7bn (slippage ratio of 3.4%) in 2QFY15. Higher slippage was...

UNBKs 1Q performance was largely inline with estimates. Lower reductions led to a rise in GNPAs, despite a marginal sequential decline in slippages. Restructuring was lower than estimated as well. UNBK refinanced assets worth Rs 62.4bn (eight ACs) under the 5:25 scheme.

However, earnings declined 22% yoy due to high base. NII growth was weak due to moderatecreditgrowth.Thebank'sfocusonretail,agriculture,andMSMEsegmentsstarted showing traction in terms of fee income. Operating expenses were contained due to...

Over the last couple of years Union Bank of Indias (UNBK) management has steered admirably well in a stressed environment by (1) moderating growth rate, (2) adding granularity to B/S and (3) focusing on RWA to conserve capital. UNBKs FY15 Annual Report reflects some of these initiatives.

UNBK 4Q performance was stable on most operating metrics. Lower slippages along with improvement in PCR and sale to ARCs led to flat QoQ headline NPLs. Restructuring was high, a trend seen in peers as well. NIM decline of 13bps QoQ was on expected lines which led to a 3% miss on NII.