United Bank Posted Meager Profit – Shares Tank 5%
DSIJ Intelligence / 06 Feb 2013
For the Dec quarter of 2012, United Bank of India's, Net Interest Income (NII) of the bank de-grew by 5% to Rs 634 crore while Net Profit for the bank stood at Rs 42 crore against Rs 226 crore in the similar period last year which is down by 81%.
United bank of India (UBI) yesterday post market hours came out with its Q3FY13 numbers which were not encouraging. For the Dec quarter of 2012, Net Interest Income (NII) of the bank de-grew by 5% to Rs 634 crore while Net Profit for the bank stood at Rs 42 crore against Rs 226 crore in the similar period last year which is down by 81%.
Higher Provision led the banks Profits to come on the lower side. Provisions of the bank increased by 125% to Rs 450 crore on YoY basis. The stock reacted negatively in the first trades, opening lower by 12%, however it recovered some of its ground trading down 5% to Rs 67.3 per share.
The following are the key financial parameters of the bank:
| Particulars (%) | Dec -12 | Dec -11 |
|---|---|---|
| Net Interest Income (NII) | 634.13 | 667.61 |
| Net Profit (Rs/Cr) | 42.2 | 226.02 |
| CAR (Basel II) | 11.88 | 12.63 |
| Provisions (Rs/Cr) | 450 | 199.29 |
| Gross NPAs | 4.42 | 3.28 |
| Net NPAs | 2.22 | 2.01 |
| Return On Assets | 0.16 | 1 |
As on 31st December 2012, Capital Adequacy Ratio (CAR) of the bank as per Basel II norms stands at 11.88 against 12.63% in the similar period last year. Return on Assets (ROA) of the bank also decreased substantially standing at 0.16% against 1% in the similar period last year.
On the segmental front, Revenue from retail decreased by 10% to Rs 415 crore while Profit from the same grew at a handsome growth of 36% to Rs 271 crore on YoY basis. Profit from Treasury and Wholesale banking segment witnessed a de-growth by 33 and 5% t Rs 59 and 412 crore respectively.
We believe bank is still facing serious headwinds on the asset quality front. On the valuation, the bank is trading at the price to book value of 0.5x. We would advise our readers to stay away from the counter we believe there could be further downside in the scrip.
| Particulars | Revenue | Operating Profit | ||||
|---|---|---|---|---|---|---|
| Segment (Rs/Cr) | Dec -12 | Dec -11 | % Change | Dec -12 | Dec -11 | % Change |
| Treasury Operations | 755.37 | 529.37 | 42.69 | 59.08 | 87.91 | -32.79 |
| Retail Banking | 415.19 | 461.22 | -9.98 | 271.15 | 198.82 | 36.38 |
| Wholesale Banking | 1403.39 | 1203.86 | 16.57 | 411.98 | 435.17 | -5.33 |
| Other Banking Operations | 25.34 | 19.63 | 29.09 | 25.34 | 19.65 | 28.96 |
| Unallocable Income | 0.11 | 0.09 | 22.22 | |||
| Total | 2599.4 | 2214.17 | 17.40 | 767.55 | 741.55 | 3.51 |
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