Union Bank of India reports 34.43% surge in net profit for Q2 FY25

Union Bank of India has announced its financial results for the second quarter of the fiscal year 2025, revealing a substantial year-on-year (YoY) growth of 34.43% in net profit. The results highlight the bank’s strong performance across various sectors, with non-interest income also witnessing a significant increase of 44.19% compared to the same period last year. The bank’s growth trajectory showcases a solid financial foundation as it continues to expand its deposit base and improve key metrics.

Strong Financial Performance in Q2 FY25

Union Bank of India reported a total net profit of ₹4,720 crore for Q2 FY25, marking a substantial increase from ₹3,511 crore recorded in the same quarter last year. The rise in profit reflects the bank’s successful strategy in diversifying its income sources, particularly through non-interest avenues. The non-interest income reached ₹5,328 crore, a sharp increase from ₹3,695 crore in Q2 FY24, indicating a robust performance in fee-based and other ancillary services.

Deposit Base and Business Growth on an Upward Trajectory

The bank’s domestic deposits saw an 8.12% YoY growth, totaling ₹12.42 lakh crore as of September 30, 2024. This growth demonstrates Union Bank of India’s ability to attract and retain customers, contributing to its expanding deposit base. Overall, the total business of the bank grew by 9.37%, with gross advances rising by 9.63% YoY. As of the end of Q2 FY25, the bank’s total business volume stood at ₹21.71 lakh crore.

Significant Gains in Retail, Agriculture, and MSME Segments

Union Bank of India’s focus on key sectors like retail, agriculture, and MSMEs (Micro, Small, and Medium Enterprises) paid off, with the RAM (Retail, Agriculture, and MSME) segment growing by 12.31% YoY. Within this, retail advances rose by 14.33%, agriculture loans by 15.96%, and MSME advances saw a modest increase of 5.24%. This segment now constitutes 58.71% of the bank’s domestic advances, highlighting its strategic emphasis on supporting essential economic segments.

Improvement in Asset Quality and Capital Ratios

The bank’s gross non-performing assets (GNPA) ratio declined by 202 basis points (bps) to 4.36%, and the net non-performing assets (NNPA) ratio dropped by 32 bps to 0.98% as of September 30, 2024. This reduction underscores Union Bank of India’s improved asset quality management. Furthermore, the Capital Adequacy Ratio (CRAR) improved to 17.13% from 16.69% a year ago, and the Common Equity Tier 1 (CET1) ratio rose to 13.88%.

Expert Insight on the Bank’s Performance

Industry analysts have noted that Union Bank of India’s robust growth in Q2 FY25 reflects the bank’s effective strategies in risk management and diversification. The rise in non-interest income, alongside a solid performance in RAM segments, indicates a well-rounded approach to capitalizing on growth opportunities. The improvement in asset quality ratios, as noted by experts, suggests a strong recovery and a proactive stance in managing non-performing assets.