The shares of one of India’s leading public sector banks gained 2.5 percent to Rs 108.70 per share after it received a credit rating of AAA from AA+ for its long-term instruments.
At 12:25 p.m, Union Bank of India Ltd shares were trading at Rs 106.95 a share, up 0.80 percent from the previous close price on the National Stock Exchange The company has a market capitalization of Rs 79,276 crore.
According to the exchange filing, On November 23, 2023, Credit rating agency ICRA Ltd Upgraded the bank’s Tier 2 long-term ratings bonds to AAA from AA+, and revised Outlook to ‘Stable’ from ‘Positive’.
ICRA upgraded the bank’s long-term rating based on sustained improvement in its earnings profile, driven by the decline in fresh non-performing asset (NPA) additions, healthy recoveries/upgrades as well as the high provision coverage on legacy NPAs, resulting in a moderation in the credit costs.
Moreover, the bank’s capitalization levels and solvency profiles have strengthened gradually on the back of the improvement in the internal capital generation levels.
The bank’s interest earned has significantly increased year on year by 25 percent, from Rs 19,778 crore in Q2FY23 to Rs 24,731 crore in Q2FY24. In the same time frame, the company’s net profit has increased by 24 percent, from Rs 1,839 crore to Rs 3,548 crore.
The bank’s NPA was reduced to 1.30 percent in Q2FY24 from 2.64 percent in Q2FY23. Whereas the net profit margin has increased to 10.38 percent from 7.63 percent during the same time period.
Union Bank of India shares have gained a return of 55 percent in the last six months and 36 percent in a year.
According to the latest shareholding pattern, the majority of the stake is under the government of India accounting for 76.99 percent of the company, Domestic Institutional Investors hold 12.69 percent, and retail investors hold a 7.42 percent stake.
Union Bank of India is engaged in the Business of Banking Services, Government Business, Merchant Banking, Agency Business Insurance, Mutual Funds, Wealth Management, and many others.
Union Bank of India merged with erstwhile Andhra Bank and erstwhile Corporation Bank on April 1, 2020, to form the fifth-largest PSB and the eighth-largest bank in the Indian banking system with a total asset base of Rs. 13.1 lakh crore as of September 30, 2023.
Written by Omkar Chitnis
