Union Bank to raise up to ₹3,000 crore via QIP, shares rally nearly 7%

Shares of Union Bank of India gained nearly 7% on Wednesday after the public sector lender announced raising ₹3,000 crore through a qualified institutional placement (QIP). The PSU bank has set a floor price of ₹142.78 per share for the issue, which opened Tuesday, February 20.

"We wish to inform you that the Committee of Directors for raising capital funds has at its meeting held today, February 20, 2024, approved the raising of funds for an amount not exceeding ₹3,000 crore through the issue of equity shares through Qualified Institutional Placement subject to the requisite regulatory/statutory approvals," the bank said in a filing with the stock exchanges on Tuesday.

Following the QIP announcement, shares of Union Bank surged as much as 6.87% to an intraday high of ₹150.8 apiece on the NSE. However, the stock pared early gains and traded at ₹148 per share, up 4.89%, at 12:56 PM.

Union Bank shares have rallied over 113% in the last one year and 23.19% on a year-to-date (YTD) basis.

Earlier this month, Union Bank of India was included in the Global Standard index by global index service provider Morgan Stanley Capital International (MSCI) along with four Indian companies.

Union Bank reported a stellar growth across segments in its quarterly results for Q3FY24, released in January. The PSU bank posted 60% growth in its net profit during the third quarter of the current financial year. The lender’s net profit rose to ₹3,590 crore from ₹2,244.8 crore in Q3FY23.

The bank's net interest income (NII) also shot up by 6.3% to ₹9,168 crore in the December quarter as against ₹8,628.1 crore in the corresponding period of the previous fiscal year.

The public sector lender’s capital adequacy position also improved with its Capital to Risk-Weighted Assets Ratio (CRAR) rising to 15.03% as of December 31, 2023, from 14.45% in corresponding period a year ago.

While its retail business grew by 17.88%, agriculture and MSME advances were up by 17.88% and 10.51%, respectively. Union Bank's total business grew by 10.67% on a year-on-year basis to ₹20,68,429 crore as of December 31, 2023.