Union Bank of India Q2 Results: Stock falls as Agri slippages rise despite decline in segment loans

State-run Union Bank of India Ltd. reported results for the September quarter on Thursday, October 30. The stock fell to the lows of the day after slippages increased within the Agri segment.

Union Bank's Net Interest Income, or core income fell by 2.6% on a year-on-year basis to ₹8,812 crore, which although, is higher than the CNBC-TV18 poll expectation of ₹8,744 crore.

Net profit declined by 10% from last year to ₹4,249 crore. A CNBC-TV18 poll had projected a greater fall in profitability for the lender to ₹3,528 crore.

Union Bank's asset quality improved on a sequential basis. Gross NPA at the end of the September quarter stood at 3.29% from 3.52% in June, while Net NPA improved to 0.55% from 0.62% in June.

In absolute terms, Union Bank's Gross NPA stood at ₹32,085 crore from ₹34,311 crore in June, while Net NPA improved to ₹5,209 crore from ₹5,873 crore in the previous quarter.

Provisions for the quarter reserved for Non-Performing Assets (NPAs) nearly halved to ₹526 crore from ₹1,152 crore.

Union Bank's advances grew by 5% from the same quarter last year, while deposits grew only by 1.9%.

Fresh slippages for the quarter declined to ₹1,985 crore from ₹2,199 crore in June. However, write-offs increased to ₹2,201 crore from ₹2,076 crore in June.

However, the slippages within the agriculture segment increased with total slippages at ₹809 crore at the end of the September quarter, from ₹699 crore in June. Slippages within retail, MSME and other segments saw improvement.

This is despite the overall Agri portfolio of the bank declining to ₹1.68 lakh crore, from ₹1.91 lakh crore during the same quarter last year.

Cash recoveries stood at ₹1,113 crore at the end of the September quarter, while upgradations stood at ₹1,0-63 crore. Both parameters improved from the June quarter.

Shares of Union Bank of India are currently fluctuating between gains and losses, currently trading little changed at ₹146.38. The stock is up 6% in the last one month and has extended its year-to-date advance to 20%.