Union Bank Q3 FY19 – still searching for the good day

Union Bank Q3 FY19 – still searching for the good day

The quarterly earnings report from the first public sector bank, Union Bank of India, does not provide a ray of hope for the beleaguered public sector banking sector.

Business growth looks shaky on the back of slender capital support, asset quality is not totally out of the woods and the decline in yield on G Sec hasn’t helped much.


Source: Company


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– The growth in Net interest income (difference between interest income and expenses) declined as advances de-grew.

– Other income was a bit of a respite thanks to the bond gains.

– Operating expense growth was well contained with cost to income ratio stable.

– However, courtesy the weak core performance, the pre-provision profit grew by only 6%.

– The steep decline in provision on account of regulator driven recognition of stressed assets earlier as well as significant write back in provision for investment depreciation was a sole respite.

– Business growth was tepid too with overall advances de-growing and deposits growing by paltry 1%. However, in the domestic business, the growth in advances and deposits was a tad better.

– The better growth in CASA (low cost savings and current account) with the share of CASA improving to 35.5% was a silver lining.

– Although asset quality was prima facie stable with a slight sequential reduction in reported gross and net NPA, slippage at Rs 2983 crore in the quarter was sequentially higher.

– While the Capital position is above the regulatory threshold, it isn’t comfortable enough to start the growth engine despite the macro opportunities.

We remain cautious and watchful on this space.