Views on Union Bank 3QFY2014 results - Angel Broking

Views of Mr. Vaibhav Agrawal (VP- Research – Banking, Angel Broking) on Union Bank 3QFY2014 results:

"Union bank reported modest asset quality pressures during quarter. On the operating front NII grew by 4% yoy ( in spite of healthy advances growth of 20% yoy probably on back of interest reversals). Non-interest income grew by 6% yoy. Operating expenses grew higher by 18% (in line with expectations). Overall, pre-provisioning profit for the bank de-grew by 7% yoy. On the asset quality front, the bank witnessed moderate pressures, as Gross and Net NPA levels increased sequentially by around 9% respectively. Gross and Net NPA ratio for bank increased by 21bp and 11bp respectively. Slippages came in lower qoq at 2.3% (3.2% in 2QFY2014 and 1.5% in 3QFY2013) while recoveries and upgrades came lower at Rs. 265cr against Rs. 453cr run-rate for last four quarters. Provisioning expenses for bank decreased by 30% ( unexpectedly) yoy, thus overall bottom-line witnessed growth of 15% yoy. Considering recent macro developments in a weak economic environment, we believe that asset quality stress is unlikely to abate as quickly as was anticipated earlier. Hence, we maintain our Neutral rating on the stock."

Source : Equity Bulls

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