UNITED BANK NET RISES 14% ON INTEREST INCOME

United Bank of India anticipates a moderation in growth rate this year on account of the present economic conditions, high interest rates and poor credit demand.

According to Mr S.L. Bansal, Executive Director, the bank also plans a downward revision of its annual credit growth target at 18 per cent as against the previous estimate of 20 per cent. Announcing the quarterly results on Monday, Mr Bhaskar Sen, Chairman and Managing Director of United Bank, said:

 “The credit growth which was at 26 per cent as on March 31, 2011 dropped to 19 per cent as on June 30. This has further slipped to 17 per cent during the second quarter of this fiscal. Given the present economic conditions we expect some moderation in growth rates this fiscal.” Meanwhile, riding on the back of a higher net interest income, United Bank posted 14 per cent rise in net profit at Rs 125 crore for the quarter ended September 30, 2011, as against the corresponding period last year.

The bank's slippages more than doubled at Rs 623 crore (Rs 203 crore) during the quarter. “More than 50 per cent of the slippages are on account of mid corporate accounts; the rest is contributed by small ticket advances such as micro and small enterprises and agricultural loans,” Mr Sen said.

The gross and net non-performing assets increased to 3.5 per cent and 2.2 per cent respectively.

United Bank will take a call regarding the interest rates on savings bank deposits at its asset-liability committee meeting in the next couple of days. “We have to examine various issues and options available before taking a call on this matter,” Mr Sen said.

The net interest margin improved to 3.16 per cent (3.04 per cent). With the additional cost to be incurred on a possible rise in interest rates on savings bank account and an overall rise in cost of funds the bank was not sure of sustaining its margins at these levels. However, United Bank would aim to keep its NIM at three per cent by the end of this fiscal, Mr Sen pointed out.

The bank's capital adequacy ratio was at 12.95 per cent as on September 30.

SOURCE: http://www.thehindubusinessline.com/todays-paper/tp-money-banking/article2589808.ece