Union Bank of India - Feb 2025 Earnings Call Transcript Analysis

February 1, 2025 · 2 min read

Earnings Call Transcript Analysis Report #

Net Profit (Q3 FY25): ₹4,604 crores, +28.2% YoY.
Net Profit (9M FY25): ₹13,002 crores, +25.8% YoY. (Full year FY24 profit was ₹13,648 crores).
Return on Assets (RoA): Improved to 1.3%.
Return on Equity (RoE): Reached 17.75%.
Capital Adequacy Ratio (CAR): 16.72% (CET1 ratio of 13.59%) as of December 2024.
Asset Quality:
- Gross NPA (GNPA): Reduced by 98 bps YoY to 3.85%.
- Net NPA (NNPA): Improved by 26 bps YoY to 0.82%.
- Provision Coverage Ratio (PCR): Increased by 88 bps to 93.42%.
Credit Cost: 63 bps.
Slippage Ratio: Improved to 89 bps.
Net Interest Margin (NIM): 2.94% for 9M ended Dec 2024 (QoQ improved by 1 bps to 2.91% for Q3).
Deposits Growth (Terminal): Moderated to 3.8% YoY.
Advances Growth (Terminal): 5.9% YoY.
Average Deposits Growth YoY: 7.6%.
Average Advances Growth YoY: 10.9%.
Non-Interest Income (YoY): Growth of ~25%.
- Core Fee Income (YoY): +26%.
- Treasury Income (YoY): +23%.
- Recoveries from Written-off Accounts (YoY): +32%.
Net Interest Income (NII) Growth (YoY for Q3): ~1%.

Profitability and asset quality metrics are in line with expectations.
Business growth (deposits & advances) moderated in Q3 FY25.
Revised Guidance: Bank anticipates achieving growth “closer to the lower end of our guidance for deposits and advances.” (Original advances guidance was 11-13%).
NIM Guidance: Maintained at 2.8% to 3% for FY25.
GNPA: Current 3.85% is already below the year-end target of <4%.
Recoveries: Gross recoveries for 9M FY25 reached ₹10,789 crores, aligning with the annual guidance of ₹16,000 crores.
Effective Tax Rate: Q3 ETR was ~21-22% due to revisiting estimates; average expected ETR is 24-25%.

Growth: Net profit, RoA, RoE, asset quality improvement (lower NPAs, higher PCR), non-interest income. Retail term deposit growth was strong (₹22,000 crores absolute growth in 9M FY25 vs ₹6,500 crores in 9M FY24).
Decline/Moderation: Headline deposit and advances growth (terminal figures) moderated due to strategic shedding of bulk deposits and macroeconomic factors. MSME loan book saw a reduction due to reclassification and URN issues. Interest income accrual from NPA recoveries in 9M FY25 (₹1,738 crores) was lower than 9M FY24 (₹2,223 crores).

Strategy prioritizes “profitability and operational efficiency over aggressive growth.”
Conscious shedding of over ₹30,000 crores in high-cost bulk deposits to protect NIMs and improve CASA.
Focus on sustainable growth with a balanced approach to top-line and

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