United bank of India shares surged 10 per cent to Rs. 38.10 on Tuesday after the state-run lender reported a 14-fold increase in its quarterly net profit. United Bank’s net profit rose to Rs. 469 crore in the March quarter as against Rs. 31.18 crore in the same quarter a year earlier.
The sharp rise in profits is surprising considering the lender had posted a huge loss of Rs. 1,238 crore in the previous quarter, largely on account of non-performing assets (NPAs).
United Bank’s executive director Sanjay Arya said upgradation of non-performing assets and cash recovery helped the lender’s topline.
“NPA reduction stood at Rs. 2,592 crore for the quarter. There was also a write-off of over Rs. 400 crore,” he said.
During the March quarter, United Bank’s gross NPA declined to 10.47 per cent of advances as compared to 10.82 per cent in the quarter ending December 31. Its net NPA came at 7.18 per cent compared to 7.44 per cent in the previous quarter.
This is good news as United Bank’s NPAs or bad loans had more than doubled to around Rs. 8,550 crore between July and December, limiting the bank’s ability to lend. As a result, post the December quarter, United Bank had to suspend giving loans above Rs. 10 crore. During the March quarter, United Bank’s advances declined as compared to a year before.
The bank’s capital adequacy ratio, a measure of financial strength has also improved to 9.81 per cent in the March quarter compared to 9.01 per cent in the December quarter.
Its net interest income (interest earned over interest paid) grew nearly 24 per cent to Rs. 699 crore against Rs. 564 crore reported in the same quarter a year earlier.