MOSL: UNION BANK OF INDIA (Neutral)-Asset quality pressure continues
Union Bank of India: Asset quality pressure continues; maintain Neutral
(UNBK IN, Mkt Cap USD1.5b, CMP INR128, TP INR145, 13% Upside, Neutral)
- UNBK reported a loss of INR12.5b. PPoP growth of -15%/-11% QoQ/YoY was nullified by elevated provisions of INR32.5b (8% QoQ decline) as the bank provided INR9.9b towards the NCLT 2nd list in advance, thereby taking care of all provisioning needed towards these accounts by FY18. Provisions also included INR481m of additional provisions towards standard accounts in telecom and power sector.
- NII growth picked up on a moderate base to 19% YoY to INR25.5b, even with an interest reversal of INR3.8b. Domestic/Global NIM came in at 2.34%/2.12% (2.19%/2.08% in 2QFY18). Muted trading gains of (INR60m compared to INR4.8b in 2Q) led to 35% YoY decline in in other income.
- Gross slippages spiked 56% QoQ to INR41.9b (5.8% slippage ratio) vs INR26.9b last quarter, while recoveries and upgrades picked up to INR6.9b, leading to net slippage ratio of 5.3%. Total pool of NSL (NNPL + OSRL + other stressed loans) declined to INR301.4b (10.3% of advances) from 11.5% in the previous quarter. During the quarter the bank witnessed slippage in one power account of INR5.5b
Union Bank of India operates through more than 4000 branches across the country. Co. serves its clients' need of saving maximization by offering specialized deposit products like current deposit, term deposit and flexi deposit. Co. offers products and services such as working capital finance, term loan, infrastructure finance, line of credit and many more. Co.'s Government Business Division offers a bouquet of products for its customers: Pension payments, Collection of various Taxes, Deposit Schemes like Senior Citizens Deposit Scheme & Public Provident Fund Accounts, Investment opportunities in Government Bonds, Old age security Schemes like the New Pension System.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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