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Union Bank reported a robust performance for the third quarter of the fiscal year 2024, with a net profit of ₹3,511 crore. The bank’s net interest income rose by 10% year-on-year to ₹9,126 crore, and its net interest margin expanded by three basis points to 3.18%.
The bank’s shares experienced a rally following a significant 90% surge in Q2 net profit. However, the rally was short-lived due to profit booking, leading to a steep decline in share prices. As of mid-morning on Monday, the stock was trading at ₹100.05, just above its last closing price.
Improvement in asset quality was another highlight from Union Bank’s Q3 report. The gross non-performing assets (NPA) dropped by 96 basis points to 6.38%, and net NPAs fell by 28 basis points to 1.3%.
The bank also reported an increase in CASA (current account savings account) deposits. The YoY increase stood at 4.45%, bringing the total to ₹11.37 lakh crore (INR100 crore = approx. USD12 million).
In light of these results, Motilal Oswal maintained a ‘Buy’ rating for Union Bank with a target price of ₹125. The financial services firm attributed Union Bank’s strong quarterly performance to higher treasury gains, healthy margins, lower provisions, moderated fresh slippages, healthy recoveries and upgrades, controlled restructuring at 1.7%, and an overall healthy outlook on asset quality.
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