Union Bank Shares Soar 7% on Strong Q3 Asset Quality Boost
Overview
Union Bank of India shares climbed 7% after the state-run lender reported improved asset quality and a 9% year-on-year net profit rise for Q3. Gross NPAs fell to 3.06% and net NPAs to 0.51%, signaling stronger financial health. The stock has gained 70% in the past year.
Stocks Mentioned
Union Bank of India's stock surged 7% on Wednesday, January 14, following the release of its third-quarter earnings report for the October-December period. The significant jump was driven by marked improvements in the lender's asset quality metrics and a healthy profit increase.
Slippages, which represent new bad loans added during the quarter, declined substantially to ₹1,853 crore from ₹2,151 crore in the previous quarter. This reduction indicates effective risk management and a more stable loan portfolio for the public sector bank.
Asset Quality Strengthens
The bank's asset quality showed sequential improvement across key indicators. Gross Non-Performing Assets (NPAs) improved to 3.06% from 3.29% in September. Correspondingly, Net NPAs, which exclude provisions, tightened to 0.51% from 0.55% in the prior quarter.
In absolute terms, Union Bank's Gross NPAs reduced to ₹31,121 crore by the end of the December quarter, down from ₹32,085 crore in September. Its Net NPAs also saw a dip, standing at ₹5,102 crore compared to ₹5,209 crore in the preceding quarter.
Profitability Gains
The lender reported a robust 9% year-on-year increase in net profit, reaching ₹5,017 crore for the quarter. This growth outpaced the ₹4,604 crore posted in the same period last year, showcasing enhanced earning capacity.
However, Net Interest Income (NII), the bank's primary source of operating income, remained largely flat. It saw a marginal 1% year-on-year growth, reaching ₹9,328 crore.
Market Reaction
Shares of Union Bank of India traded at ₹177.29, up 6.7% for the day. The stock had touched an intraday record high of ₹179.26 following the earnings announcement. This surge builds on an already impressive performance, with the stock having risen approximately 70% over the past twelve months, reflecting sustained investor confidence.
