Buy Union Bank – TP Rs.252 - Geojit BNP Paribas Financial Services Limited

The bank has reported NII increase of 7.2% yoy and net profit of Rs.150 crore, which is 74.4% down yoy.

Net profit is impacted by one-off NPV (net present value) loss of Rs.380 crore from restructuring of accounts worth Rs.2040 crore.

NIM improved to 3.31% in 3Q from 3.21% in 1Q as yield on funds improved 37 bps qoq to 9.62% while cost of funds increased 18 bps qoq.

Slippages decreased to 1.7% frowm 5.8% in 2QFY12. GNPA declined to 3.33% FROM 3.49% IN 2QFY12.

CASA deposits ratio improved to 32.5% in 3Q from 32.1% in 2Q and the bank has been reducing high cost deposits.

Advances grew at healthy 16.8% yoy and 6.1 % qoq. Management has guided 16% advance growth for FY12.

GNPA is expected to bring down to 3% by 4QFY12 end.

Equity infusion of Rs.270 crore by the government is also expected in 4Q which will help improve Tier -1 capital from the current level of 8%.

Source : Equity Bulls

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