According to a recent press report Union Bank has reported a modest growth in profit. The main reason for its growth profit was the increased NPAs and the decrease in credit Growth.
Mr. M. V. Nair Chairman and Managing Director of the bank said that the reason for modest growth was the shifting of bank accounts to system-based-recognition method. The bank’s loan amounting to less than 5 lakh is also moved to this method, as a result the NPAs have increased and has affected the profit of the Bank. The bank has also planned to concentrate on recovering bad loans.
Reports said that the Gross NPAs have increased from Rs. 3,524 crore to Rs. 5,136 crore, as on March 2011; the Incremental Advances have decreased from Rs 1,53,022 crore to Rs 1,47,284 crore.
According to reports, the other reason for hike in profits was the low lending rate on short-term loans and this was done in order re-balance the portfolio. The bank’s Non-interest income had decreased due to low treasury income (Rs 161 crore), sale of investments (Rs 100 crore) and recovery written off (Rs 42 crore).
As per reports the bank’s credit growth stood at 18 percent, deposit rates were at 15.5 percent, Non-interest income at 3.2 percent and Non-Performing Asset at 2.65 percent.