Union Bank of India shares fall up to 5% after weakest loan growth in four quarters

Shares of State-owned Union Bank of India Ltd.  fell as much as 5% on Wednesday, July 9, in reaction to its business update for the April-June quarter.The lender’s loan book grew just 6.8% from last year, which was not only the weakest loan growth seen in the last four quarters, but also the fourth consecutive quarter when loan growth has been in single digits.
Union Bank’s loan book at the end of the June quarter stood at ₹22.1 lakh crore, compared to ₹21.08 lakh crore in the same quarter last year.
Total deposits rose 3.63% year-on-year to ₹12.39 lakh crore from ₹11.96 lakh crore. This is also the sixth straight quarter when deposit growth has been in single digits.Global gross advances stood at ₹9.74 lakh crore, registering a 6.8% increase over ₹9.12 lakh crore in Q1 FY25.

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The bank’s domestic RAM (Retail, Agriculture, and MSME) portfolio rose 10.31% to ₹5.44 lakh crore. Within this, domestic retail advances posted strong growth, rising 25.60% year-on-year to ₹2.28 lakh crore from ₹1.82 lakh crore.Fourth Quarter Results

The lender’s net profit went up by 51% from the same quarter last year to ₹4,984.9 crore. The profitability was also aided by a higher other income component, which stood at ₹5,509 crore, compared to ₹4,707 crore during the same quarter last year.

Net interest income (NII), which is the difference between the interest income a bank earns from its lending activities and the interest it pays to depositors, was up 0.8%, coming at ₹9,514 crore against ₹9,436.5 crore in the corresponding quarter of FY24.

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Union Bank’s asset quality saw improvement from the previous quarter, with Gross NPA at 3.6% from 3.85% in the December quarter, while net NPA stood at 0.82% from 0.63% compared to the December quarter. Provisions for non-performing assets saw a marginal increase from the December quarter to ₹1,675 crore from ₹1,477 crore.

Shares of Union Bank of India are trading 4.4% lower on Wednesday at ₹143.45. The stock has declined 8% in the last one month and is among the worst performers on the Nifty PSU Bank index.