Union Bank posts 10 pc fall in Q2 profit over dip in core income, recoveries from written-off loans

State-run Union Bank of India on Thursday reported a 10 per cent decline in September quarter profit at Rs 4,249 crore, driven by a decline in core income and also recoveries from written-off accounts.

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''.

During the quarter, it reported a 2.6 per cent dip in the core net interest income at Rs 8,812 crore due to a softer loan growth of less than 5 per cent and also a narrowing of the net interest margin to 2.67 per cent from 2.90 per cent in the year-ago period.

Pandey did not share a specific target on the loan growth for FY26, but added that it still aspires to grow the book at 8-10 per cent on the back of faster retail loan growth.

The bank's chief financial officer Avinash Prabhu said it grew large corporate credit by only 1 per cent because it was not comfortable with the rates demanded by the borrowers.

The other income declined 6.24 per cent year-on-year to Rs 4,996 crore, driven by a 70 per cent drop in profit on sale of investments at Rs 192 crore and a 36 per cent decline in recovery from written-off accounts at Rs 913 crore during the quarter.

Kamath pointed out that the Rs 500 crore decline in the recoveries aspects was one of the major reasons which dented the overall profit decline.

It reported gross slippages of Rs 2,151 crore, down from Rs 2,345 crore in the quarter-ago period and Rs 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 Rs 500 crore.

The overall provisions declined to Rs 2,565 crore from Rs 3,393 crore in the year-ago period, and Kamath said it accelerated the standard asset provisions to Rs 882 crore as against a write-back of Rs 1,029 crore in the year-ago period.

This was done as part of a transition to the expected credit loss system of provisions, he added.

The overall gross non-performing assets ratio improved by 1.07 per cent year-on-year to 3.29 per cent as of September 30.

The bank's overall capital adequacy stood at a comfortable 17.07 per cent with the core buffers at 14.37 per cent.

The Union Bank of India scrip closed 2.6 per cent down at Rs 142.35 a piece on the BSE on Thursday, as against a 0.7 per cent correction on the benchmark.