Mumbai, Oct 20 (PTI) State-run Union Bank of India on Thursday reported an over 21 per cent annualised growth in net income at Rs 1,848 crore for the September quarter, driven by higher recoveries, improved asset quality and margin expansion.

The city-headquartered lender's key profitability gauge, net interest income, grew 21.61 per cent to Rs 8,305 crore as the bank passed on as much as 165 bps of the 190 bps repo rate hike by the RBI to borrowers, boosting its net interest margin by 20 bps to 3.15 per cent, A Manimekhalai, managing director and chief executive, told reporters.

Also Read | IDBI Bank Privatisation: LIC To Recover Its Investment by Time of Sale.

The bank had Rs 2,900 crore of fresh slippages during the quarter but recovered -- through write-backs and from NCLT processes -- Rs 5,100 crore, of which Rs 1,700 crore came in from written-off accounts alone, said Chief General Manager - stressed assets vertical, Ashok Chandra.

During the quarter the bank wrote off loans worth Rs 8,900 crore, up from Rs 6,000 crore in the year-ago period.

Also Read | Tata Consumer Products Q2 Profit Rises 36% to Rs 389 Crore; Revenue Up 11% to Rs 3,363 Crore.

Chandra told PTI that the bank has received Rs 538 crore from NCLT resolution processes, with average haircut being more than 65 per cent of the submitted claims.

He also said slippages are within the guidance of Rs 13,000 crore for this fiscal and it has already accounted for Rs 6,700 crore in the first half of FY23.

Of the total slippages, Rs 1,000 crore came in from the agri book, Rs 900 crore from MSMEs, Rs 530 crore from large corporate accounts and Rs 430 crore from the retail loan book, primarily home loans, Manimekhalai said.

The technical write-off target remains Rs 18,000 crore for the bank as projected in the beginning of the year, Chandra said.

He further said the bank has moved three accounts worth Rs 1,000 crore to the National Asset Reconstruction Company (NARCAL) and will soon be receiving Rs 445 crore from these accounts -- JP Infra, Mittal Corporation and Minakshi Energy.

The bank will be selling nine more accounts worth Rs 9,000 crore to the national bad bank over the remainder of the fiscal. That apart, it has two IL&FS accounts which are nearing resolution from which it expects Rs 440 corre recovery, Chandra said.

Manimekhalai said asset quality stress is more on the MSME and agri side along with home loans, which she fears would go up as the interest rates are on the rise. MSME bad loan ratio was at 16 per cent and there is more stress coming in, while the bank does not have any issues with the quality of its education book, where many other lenders are facing headwinds now.

Led by its retail and agri book, advances increased 21.92 per cent, taking the total business of the bank up 17.33 per cent at Rs 18,16,955 crore. Total deposit grew 14.14 per cent to Rs 10,43,265 crore.

Retail, agri and MSME credit grew 14.86 per cent. These three segments constitute 54.57 per cent of its assets, she added.

On the asset quality front, she said gross NPAs declined by 419 bps to 8.45 per cent or Rs 65,391 crore of total advances, while net NPAs came down by 197 bps to 2.64 per cent or Rs 19,193 crore in the September quarter.

Interest income rose 17.81 per cent to Rs 19,682 crore, while interest expenses jumped 15.2 per cent to Rs 11,377 crore.

On the other hand, net interest income rose 21.61 per cent to Rs 8,305 crore but non-interest income declined 17.65 per cent to Rs 3,276 crore as its treasury income more than halved to Rs 400 crore from over Rs 945 crore a year ago.

Manimekhalai said the bank has board approval to raise Rs 8,100 crore capital this year, of which Rs 3,400 crore will be through a QIP issue. The qualified institutional placement (QIP) should happen this quarter or early next quarter, she added.

On the equity dilution plan in its life insurance venture IndiaFirst Life, she said the bank is looking at paring 1.5 per cent of its holding in the IPO-bound company at a valuation of Rs 75-86 a share.

The bank operates 8,729 branches, including those overseas, and 11,092 ATMs as of the September quarter.

The Union Bank counter closed over 2 per cent up at Rs 47.25 on the BSE after the announcement, while the benchmark Sensex closed a tad up gaining 15 bps over the previous day's closing.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)