How were the latest quarterly numbers of Union Bank for the Dec-20 quarter?

Union Bank reported a spoke of 28% in the Dec-20 quarter net profits at Rs.710 crore, but that was largely on the back of the 3-way merger as we shall see later. Union Bank of India reported 91.24% rise in revenues in the Dec-20 quarter at Rs.21,009 crore. The sharp spike in revenues was largely on account of the merger of Andhra Bank and Corporation Bank by the Pooling of Interest method leading to a boost in the top line.

Revenues got a leg up from treasury and retail banking and to a lesser extent from corporate banking too. Operating profits for the Dec-20 quarter were up 120% at Rs.5,332 crore. This growth was due to better cost synergies of the merger as costs got shared and distributed across key administrative and performance functions. OPM expanded from 22.02% in Dec-19 to 25.38% in Dec-20 quarter.

PAT was 28% higher at Rs.710 crore in the Dec-20 quarter but could not kept pace with revenue growth due to 3-fold jump in loan loss provisions. PAT margins fell from a level of 5.04% in Dec-19 to 3.38% in Dec-20 quarter. Gross NPAs at 13.49% remain high even on a standalone basis. The real worry could be the capital adequacy at 12.98%, which implies that the bank will really struggle to expand its asset book without diluting equity further.