Union Bank of India has demonstrated robust growth despite its sub-par credit growth of 10% YoY, according to a report by Emkay Global Financial. The bank’s improved loan yields led to margin expansion for the second consecutive quarter, reaching 3.18%.
A significant factor contributing to the bank’s success was a strong 6% PAT beat at Rs35bn, marking a 90% YoY increase. This was primarily due to lower provisions. The bank’s CET 1 stands strong at 13% after its third capital raise, indicating a firm control on asset quality.
The bank’s GNPA ratio improved to 6.4%, which Emkay attributes to lower slippages and higher write-offs. Despite having a high restructured pool at 1.7%, Union Bank is expected to accelerate loan growth while maintaining margin slippage.
Emkay Global Financial continues to hold its position on the stock, forecasting RoA/RoE of 1%/15-17% and projecting an earnings increase of 8-11% for FY24-26E. The report also identified Indian Bank and Canara Bank as Emkay’s preferred midcap PSBs.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.