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Union Bank Q4 net up thanks to credit growth

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Mr K. Cherian Varghese (right), CMD, Union Bank of India, and Mr K. Rathnakar Hegde, Executive Director, at a press conference in Mumbai on Wednesday. - - Paul Noronha

Mumbai , May 4

UNION Bank of India has reported a marginal increase of 1.27 per cent in net profit for the fourth quarter ended March 31, 2005. The net profit was at Rs 239 crore against Rs 236 crore last year.

The total income was Rs 1,501 crore, up 4.16 per cent, from Rs 1,441 crore. This consists of interest income, which increased by 19.75 per cent to touch Rs 1,322 crore (Rs 1,104 crore) and non-interest income, which fell 46.88 per cent to Rs 337 crore (Rs 179 crore).

The bank announced a dividend of Rs 3.50 per share for 2004-05, inclusive of the interim dividend of Rs 2 announced earlier. The face value of the share is Rs 10.

For the financial year 2004-05, Union Bank recorded a net profit of Rs 719 crore, against Rs 712 crore last year.

For the same period, total deposits increased by 22.69 per cent to touch Rs 61,822 crore (Rs 50,559 core), while advances grew 35.1 per cent to Rs 30,424 crore (Rs 41,103 crore).

The profit on sale of investments was Rs 260 crore (Rs 435 crore), down by 40.23 per cent.

Mr K. Cherian Varghese, Chairman and Managing Director, Union Bank, said, "The core areas of banking are doing well. We have been hit by Rs 540-crore depreciation on account of shifting Government securities from Available For Sale category to Held To Maturity (HTM) this year."

Mr Rathnakar Hegde, Executive Director of the bank, said, "We also had to make a provision of Rs 120 crore for increase in wage arrears and Rs 45 crore for the resultant increase in gratuity and provident funds. We could sustain this only because of credit growth."

The NPA for 2004-05 was 2.64 per cent and will hopefully fall below 2 per cent this year, Mr Varghese said.

He said the bank is likely to show an increase of 25 per cent in total business next year. Advances are likely to show a growth of around 26-28 per cent.

"Growth will come from diversified portfolios. The corporate sector has started borrowing for working capital and also for capital assets. Retail segment will also grow because of the upwardly mobile population," Mr Varghese said.

Demand for credit is likely to come from sectors such as textile, infrastructure, steel and power.

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