Union Bank of India Q4FY23 Results: The Bank that Surpassed Expectations

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Union Bank of India, one of the leading public sector banks in India, has announced its financial results for the fourth quarter and the full year of FY23. The bank has shown a remarkable improvement in its profitability, asset quality, margins and business growth despite the adverse impact of the Covid-19 pandemic and the economic slowdown.

Key Highlights of Q4FY23


  • The bank posted a net profit of ₹ 2,782 crore in Q4FY23, up by 61.18% year-on-year and 23.95% quarter-on-quarter. This was mainly driven by higher non-interest income, lower provisions and improved operating efficiency.
  • The net interest income (NII), which is the difference between interest earned and interest expended, grew by 4.37% year-on-year to ₹ 24,688 crore in FY23. However, it declined by 9.46% year-on-year and 18.01% quarter-on-quarter to ₹ 5,403 crore in Q4FY23 due to lower interest income and higher interest expenses.
  • The net interest margin (NIM), which is a measure of the profitability of lending operations, stood at 2.38% in Q4FY23, down by 51 basis points year-on-year and 56 basis points quarter-on-quarter. This was mainly due to lower yield on advances and higher cost of deposits.
  • The non-interest income, which includes fees, commissions, treasury income and other income, increased by 23.10% year-on-year and 50.92% quarter-on-quarter to ₹ 4,551 crore in Q4FY23. This was mainly due to higher recovery from written-off accounts, dividend income and forex income.
  • The operating profit, which is the profit before provisions and taxes, rose by 40.38% year-on-year and 6.54% year-on-year to ₹ 5,180 crore and ₹ 19,259 crore respectively in Q4FY23 and FY23. This was mainly due to higher non-interest income and lower operating expenses.
  • The provision coverage ratio (PCR), which is the ratio of provisions to gross non-performing assets (NPAs), improved to 81.27% as on March 31, 2023 from 78.21% as on March 31, 2022. This indicates that the bank has made adequate provisions for its bad loans.
  • The gross NPA ratio, which is the ratio of gross NPAs to gross advances, improved to 13.74% as on March 31, 2023 from 14.15% as on March 31, 2022. The net NPA ratio, which is the ratio of net NPAs to net advances, improved to 4.62% as on March 31, 2023 from 5.49% as on March 31, 2022. This indicates that the bank has reduced its bad loans and improved its asset quality.
  • The capital adequacy ratio (CAR), which is the ratio of capital to risk-weighted assets (RWA), stood at 13.34% as on March 31, 2023 with Tier I capital at 10.25% and Tier II capital at 3.09%. This indicates that the bank has sufficient capital to meet its regulatory requirements and support its business growth.

Business Growth and Performance


  • The bank registered a growth of 8.40% year-on-year in its retail, agriculture and MSME (RAM) segments, which constitute about 60% of its domestic advances portfolio. The retail segment grew by 10.49%, the agriculture segment grew by 11.89% and the MSME segment grew by 3.24%. The bank also witnessed a growth of 1.13% year-on-year in its domestic advances including corporate bonds and commercial papers.
  • The bank's total deposits increased by 8.28% year-on-year to ₹9,23,805 crore as on March 31, 2023 with CASA deposits growing by 13.15%. The CASA ratio improved to36.33% from 34.15% a year ago. This indicates that the bank has improved its low-cost deposit base and reduced its dependence on bulk deposits.
  • The bank's digital initiatives have also shown positive results with digital transactions increasing by 44% year-on-year in FY23. The bank has also secured the third

position in overall ranking and top three position in four themes out of five under the EASE (Enhanced Access and Service Excellence) framework amongst public sector banks during Q3FY23.

Dividend Declaration and Outlook

The bank has declared a dividend of ₹ 0.50 per equity share for FY23, subject to the approval of the shareholders at the annual general meeting. The bank has also expressed confidence in maintaining its growth momentum and profitability in the coming quarters. The bank expects to benefit from the recovery in the economy, the vaccination drive, the government’s stimulus measures and the RBI’s accommodative stance. The bank also plans to focus on strengthening its digital capabilities, enhancing its customer service and optimizing its cost structure.

Conclusion

Union Bank of India has delivered a strong performance in Q4FY23 and FY23 despite the challenging environment. The bank has improved its profitability, asset quality, margins and business growth. The bank has also declared a dividend for FY23 and has a positive outlook for the future. The bank has demonstrated its resilience and agility in adapting to the changing market conditions and customer expectations. The bank is well-positioned to leverage its strengths and opportunities to create value for its stakeholders.

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