Union Bank of India shares surge 4.5% on sharply lower provisions for bad loans in Q2

Shares of the state-run lender Union Bank of India rose as much as 4.5% to hit an intraday high of ₹148.73 on the National Stock Exchange after it reported September quarter earnings on Thursday. On the BSE, Union Bank of India shares rose as much as 4.46% to hit an intraday high of ₹148.70.

Union Bank of India shares came under buying interest after its provisions for bad loans fell sharply in September quarter to ₹526 crore from ₹2,504 crore a year earlier.

Union Bank's asset quality showed an improvement as its gross non-performing assets (NPAs), as a percentage of total advances, came in at 3.29% in second quarter of current financial year from 4.36% in the year-ago period.

Its net NPAs improved to 0.55% from 0.98%.

In absolute terms, gross NPAs stood at ₹32,085 crore as against ₹40,499 crore in the year-ago period.

Union Bank of India's net interest income or the difference between interest earned on loans and expended on deposits declined 2.6% to ₹8,812 crore compared with ₹9,047 crore.

The bank's net profit dropped 10% to ₹4,249 in July-September period from ₹4,720 crore in the same period last year.

Its newly appointed Managing Director and Chief Executive Asheesh Pandey said the lender will be "balancing" between topline growth and protecting bottomline from hereon.

On the speculation about another round of consolidation among state-run lenders, and if the bank will merge with one of its peers, Pandey declined comment. Without denying any speculation, he said things are "evolving".

Union Bank’s gross slippages of ₹2,151 crore, down from ₹2,345 crore in the quarter-ago period and ₹5,219 crore in the year-ago period. This was among the factors that led to the massive decline in provisions for bad assets to over ₹500 crore.

As of 10:19 am, Union Bank of India shares traded 4.2% higher at ₹148.30, outperforming the NIFTY Midcap 100 index which was up 0.2%.