Union Bank of India:Annual Report 2023-24 Analysis

Union Bank of India: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History #

Union Bank of India was established on November 11, 1919, in Mumbai, with Mahatma Gandhi as one of its early shareholders. It was founded as a limited company with an initial authorized capital of ₹25 lakh.

Headquarters Location and Global Presence #

The headquarters of Union Bank of India is located in Mumbai, Maharashtra, India. Union Bank of India also maintains a global presence through overseas branches, representative offices, and correspondent banking relationships.

Company Vision and Mission #

While a specific, publicly stated, long-term vision statement is not readily available, Union Bank of India’s mission generally focuses on:

• Providing excellent banking services to meet diverse customer needs.
• Achieving sustainable growth and profitability.
• Maintaining high standards of corporate governance and ethical conduct.
• Contributing to the economic development of the nation.

Key Milestones in Their Growth Journey #

• 1919: Established as Union Bank of India.
• 1969: Nationalized along with 13 other major banks.
• 2002: Completed its Initial Public Offering (IPO).
• 2020: Amalgamation with Andhra Bank and Corporation Bank came into effect, making it the 5th largest public sector bank in India.

Stock Exchange Listing Details and Market Capitalization #

Union Bank of India is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Market capitalization fluctuates based on market conditions and stock performance.

Recent Financial Performance Highlights #

Refer to the latest annual reports and quarterly financial statements released by Union Bank of India for accurate and up-to-date financial performance details, including net profit, revenue, asset quality, and key financial ratios.

Management Team and Leadership Structure #

The leadership team typically consists of:

• Managing Director & CEO: The top executive responsible for overall strategy and operations.
• Executive Directors: Oversee specific functions like retail banking, corporate banking, etc.
• Chief Financial Officer (CFO): Responsible for financial management.

Refer to the official Union Bank of India website for the most current information on key management personnel.

Their Products #

Complete Product Portfolio with Categories #

Union Bank of India offers a comprehensive range of banking products and services, categorized as follows:

• Deposits: Savings Accounts, Current Accounts, Fixed Deposits, Recurring Deposits.
• Loans: Home Loans, Vehicle Loans, Personal Loans, Education Loans, Agriculture Loans, MSME Loans, Corporate Loans.
• Cards: Credit Cards, Debit Cards, Prepaid Cards.
• Insurance: Life Insurance, General Insurance (offered through partnerships).
• Investments: Mutual Funds, Government Bonds, Demat Services.
• NRI Banking: Accounts, Deposits, Loans, and Remittance services tailored for Non-Resident Indians.
• Digital Banking: Internet Banking, Mobile Banking, UPI, Payment Gateways.
• Other Services: Lockers, Wealth Management, Forex Services.

Flagship or Signature Product Lines #

• Union Home Loan: A popular product catering to the housing finance needs of individuals.
• MSME Loans: Focuses on providing financial assistance to Micro, Small, and Medium Enterprises.

Recent Product Launches or R&D Initiatives #

Refer to Union Bank of India’s official website and press releases for information on recent product launches and initiatives. These may include new digital banking features, specialized loan products, or enhanced customer service offerings.

Primary Customers #

Target Industries and Sectors #

Union Bank of India serves a diverse range of industries and sectors, including:

• Agriculture
• Manufacturing
• Services
• Infrastructure
• Retail
• MSME

Geographic Markets (Domestic vs. International) #

The primary geographic market is India. Union Bank of India also has a presence in international markets, though its domestic operations are the core focus.

Major Client Segments (agricultural, industrial, residential, etc.) #

• Individuals: Salaried employees, self-employed professionals, students, senior citizens.
• Agricultural Sector: Farmers, agricultural businesses, rural communities.
• MSMEs: Small and medium-sized enterprises across various industries.
• Corporates: Large businesses and organizations.
• Government and Institutional Clients: Government agencies, public sector undertakings.

Distribution Network and Sales Channels #

• Branches: Extensive network of branches across India.
• ATMs: Wide network of ATMs for convenient cash access.
• Internet Banking: Online banking platform for various transactions.
• Mobile Banking: Mobile app for banking on the go.
• Business Correspondents: Agents who provide banking services in remote areas.

Major Competitors #

Direct Competitors in India and Globally #

• State Bank of India (SBI)
• HDFC Bank
• ICICI Bank
• Punjab National Bank (PNB)
• Bank of Baroda (BOB)
• Other major public and private sector banks in India.

Competitive Advantages and Disadvantages #

• Advantages: Wide branch network, strong presence in rural areas, government backing, diverse product portfolio.
• Disadvantages: Legacy systems, competition from private sector banks with more agile technology, potential asset quality concerns.

How they differentiate from competitors #

Union Bank of India differentiates itself through:

• Focus on financial inclusion and serving underserved communities.
• Strong relationships with government and public sector organizations.
• Emphasis on providing personalized service to customers.
• Leveraging technology to enhance customer experience.

Future Outlook #

Expansion Plans or Growth Strategy #

Expansion plans likely involve:

• Increasing digital banking penetration.
• Expanding branch network in strategic locations.
• Growing the loan portfolio in key sectors like MSME and agriculture.
• Improving asset quality.

Sustainability Initiatives or ESG Commitments #

Information regarding ESG commitments can be found in the bank’s annual reports.

Industry Trends Affecting Their Business #

• Digital Transformation: The increasing adoption of digital banking channels is transforming the industry.
• Fintech Competition: Fintech companies are disrupting traditional banking models.
• Regulatory Changes: Changes in regulations can impact bank operations and profitability.
• Economic Growth: The overall health of the Indian economy influences the demand for banking services.

Long-term Vision and Strategic Goals #

Union Bank of India’s long-term vision likely revolves around:

• Becoming a leading public sector bank in India.
• Driving financial inclusion and supporting economic growth.
• Providing innovative and customer-centric banking solutions.

Financial Analysis: Union Bank of India - FY2024 #

Ref.: नि . से . वि. ISD/78/2024-25 Date: June 26, 2024

Comprehensive Performance Overview (FY2024) #

Union Bank of India (UBI) reported a robust financial performance in FY2024, characterized by significant profit growth, improved asset quality, and strengthened capital adequacy. The Bank’s strategic emphasis on digital transformation, customer-centricity, and sustainable banking practices appears to be yielding positive results. Key highlights include an all-time high net profit, substantial growth in Net Interest Income (NII), and a notable reduction in Non-Performing Assets (NPAs). The Bank successfully raised equity capital, enhancing its capacity for future growth and resilience. ESG initiatives have been integrated into core operations, with significant lending towards renewable energy and social upliftment projects.

Three-Year Financial Trend Analysis (FY2022-FY2024) #

Analysis of key financial metrics over the past three fiscal years indicates a strong positive trajectory for Union Bank of India.

Analysis: #

• Profitability: The Bank has demonstrated exceptional growth in profitability, with Net Profit more than doubling from FY2022 to FY2024. NII and Operating Profit have also shown consistent upward trends, reflecting improved core banking operations and efficiency.
• Balance Sheet Growth: Both Deposits and Advances have grown steadily, indicating expansion in business volumes. The RAM (Retail, Agriculture, MSME) segment advances grew by 13.82% YoY in FY24.
• CASA Ratio: A decline in the CASA ratio suggests a potential increase in the cost of funds, a trend observed across the industry due to rising interest rates and competition for deposits.
• Asset Quality: Significant improvement in asset quality is evident, with both Gross and Net NPAs reducing considerably. The Provision Coverage Ratio has strengthened, indicating better provisioning against bad loans.
• Capital Adequacy: CRAR has consistently improved and remains well above the regulatory minimum, bolstered by successful capital raising (`₹8,000 Crore via QIP in FY24). CET1 ratio stood at a healthy 13.65%.
• Efficiency Ratios: RoA and RoE have improved markedly, indicating better utilization of assets and equity to generate profits. EPS has followed suit.
• Shareholder Returns: Increased dividend per share reflects the Bank’s strong financial health and commitment to shareholders.

Business Segment Performance (FY2024) #

(Based on Consolidated Segment Results from AS-17, page 392-393)

Detailed Analysis #

Union Bank of India - Financial Analysis (FY2022-FY2024) #

Balance Sheet Analysis #

Three-Year Comparative Analysis of Assets, Liabilities, and Equity #

Standalone Financials (₹ in Crores)

Source: Annual Report FY2024, Page 96 (Key Summary of Results), Page 300 (Standalone Balance Sheet FY24, FY

Financial Analysis of Union Bank of India - FY 2023-24 #

Revenue Breakdown and Growth Analysis (Standalone Basis) #

Total Income #

Increased by 21.48% YoY to ₹1,15,858.11 Crores in FY24 from ₹95,376.49 Crores in FY23.

• Interest Earned (Schedule 13): Grew by 23.57% YoY to ₹99,777.91 Crores in FY24 from ₹80,743.30 Crores in FY23.
  • Interest/Discount on Advances/Bills: Up 26.79% to ₹71,971.01 Crores.
  • Income on Investments: Up 5.21% to ₹22,467.48 Crores.
  • Interest on Balances with RBI & Other Inter-Bank Funds: Up 129.35% to ₹4,854.83 Crores.
• Other Income (Schedule 14): Increased by 9.89% YoY to ₹16,080.19 Crores in FY24 from ₹14,633.18 Crores in FY23.
  • Commission, Exchange, and Brokerage: Up 10.64% to ₹2,380.33 Crores.
  • Profit on Sale of Investments (Net): Increased significantly by 105.25% to ₹1,637.91 Crores.
  • Miscellaneous Income: Up 2.46% to ₹10,847.08 Crores.

Segment Revenue (Consolidated Basis - As per AS-17, Schedule 18, Note 10) #

• Treasury Operations: ₹31,977.43 Crores (FY24) vs. ₹26,463.30 Crores (FY23), Growth: 20.84%.
• Retail Banking Operations: ₹39,065.96 Crores (FY24) vs. ₹31,842.93 Crores (FY23), Growth: 22.67%.
  • Digital Banking Operations: ₹790.45 Crores (FY24) vs. ₹177.52 Crores (FY23)
  • Other Retail Banking Operations: ₹38,275.51 Crores (FY24) vs. ₹30,741.16 Crores (FY23)
• Corporate/Wholesale Banking: ₹42,807.93 Crores (FY24) vs. ₹35,980.32 Crores (FY23), Growth: 18.98%.
• Other Banking Operations: ₹2,195.26 Crores (FY24) vs. ₹1,941.25 Crores (FY23), Growth: 13.08%.
• Unallocated revenue was ₹3,142.26 Crores in FY24.

Cost Structure Analysis (Standalone Basis) #

Total Expenditure #

Increased by 17.56% YoY to ₹1,02,209.81 Crores in FY24 from ₹86,943.20 Crores in FY23.

• Interest Expended (Schedule 15): Rose by 31.74% YoY to ₹63,207.57 Crores in FY24 from ₹47,977.93 Crores in FY23.
  • Interest on Deposits: Up 31.94% to ₹58,504.39 Crores. This is the largest cost component.
• Operating Expenses (Schedule 16): Increased by 11.44% YoY to ₹24,439.94 Crores in FY24 from ₹21,931.39 Crores in FY23.
  • Payments to and Provisions for Employees: Up 16.04% to ₹14,377.12 Crores (58.83% of Operating Expenses).
  • Other Operating Expenses (Rent, Printing, Advertisement, Depreciation, etc.): Grew at varying rates.
• Provisions and Contingencies: Decreased by 14.51% YoY to ₹14,562.30 Crores in FY24 from ₹17,033.88 Crores in FY23, primarily due to lower provisions for NPAs (down to ₹6,383.38 Crores from ₹12,477.79 Crores).

Cost-to-Income Ratio #

Stood at 46.42% in FY24, a slight improvement from 47.30% in FY23 (MD&A, Pg. 217). Calculation based on P&L: (Operating Expenses / (Net Interest Income + Other Income)) = (24439.94 / (36570.34 + 16080.19)) = 46.41%.

Margin Analysis with Trends (Standalone Basis) #

Net Interest Income (NII) #

Increased by 11.61% YoY to ₹36,570.34 Crores in FY24 from ₹32,765.08 Crores in FY23.

Net Interest Margin (NIM) #

Improved slightly to 3.10% in FY24 from 3.07% in FY23 (+3 bps YoY). (Source: Pg. 91 & 97)

Operating Profit #

Increased by 10.77% YoY to ₹28,211.09 Crores in FY24 from ₹25,467.28 Crores in FY23.

• Operating Profit Margin (Operating Profit / Total Income): 24.35% in FY24, down from 26.70% in FY23.

Net Profit #

Surged by 61.84% YoY to ₹13,648.33 Crores in FY24 from ₹8,433.28 Crores in FY23.

• Net Profit Margin (Net Profit / Total Income): 11.78% in FY24, up from 8.84% in FY23

Cash Management #

Cash Flow and Liquidity Analysis #

Key Performance Indicators #

## Union Bank of India - Financial Analysis Report FY 2023-24

### Revenue and Profitability Metrics

*   **Net Profit:** ₹13,648 crore in FY24, a 61.84% YoY increase.
*   **Operating Profit:** ₹28,211 crore, a 10.77% YoY increase.
*   **Net Interest Income (NII):** ₹36,570 crore, an 11.61% YoY increase.
*   **Non-Interest Income:** ₹16,080 crore, a 9.89% YoY increase.
*   **Net Interest Margin (NIM):** 3.10% in FY24, up by 3 bps YoY.
*   **Return on Assets (RoA):** 1.03% in FY24, up from 0.69% in FY23 (34 bps increase).
*   **Return on Equity (RoE):** 15.58% in FY24, up from 13.26% in FY23 (232 bps increase).
*   **Total Income:** ₹1,15,858 crore in FY24, driven by a 23.57% growth in Interest Earned.
*   **Dividend:** Proposed dividend of ₹3.60 per equity share for FY24, up from ₹3.00 in FY23. Total payout increased to ₹2,748 crore from ₹2,050 crore.

### Market Share and Competitive Position

*   **Market Capitalization:** Surpassed ₹1 lakh crore, reaching ₹1,17,176 crore (NSE) / ₹1,17,138 crore (BSE) as of March 31, 2024, ranking 70th among listed entities in India.
*   **Credit Ratings:** Major rating agencies (CRISIL, CARE, ICRA) upgraded ratings for the Bank's debt.

Risk Framework #

Comprehensive Risk Assessment #

Union Bank of India - FY2023-24: Strategic and Financial Analysis #

Long-Term Strategic Goals and Progress #

Union Bank of India (UBI) is pursuing a long-term strategy focused on:

• Digital Excellence: “Project Sambhav” aims to build a digital bank within the bank. “Vyom” app has 2.68 crore users with over 400 features. Implemented 24 digital lending journeys, generating over ₹8,300 crore in digital business in FY24.
• Sustainable Growth: Aiming for net-zero emissions by 2070. Supported by a Board-approved ESG Risk Framework, Climate Risk Policy, and a Sustainable Financing Framework. Sanctioned ₹23,059 crore to the renewable energy sector by FY24.
• Enhanced Customer-Centricity
• Robust Financial Health: Profitability improvement (Net Profit grew 61.84% in FY24), asset quality improvement (GNPA reduced to 4.76%, NNPA to 1.03%), and capital adequacy (CRAR at 16.97%).
• HR Transformation: “Project Ekam” aims to digitize HR processes and foster leadership.
• CBDC Participation: Actively participating in the CBDC pilot.

Progress is measured through financial metrics, digital adoption rates, ESG financing, and achieving EASE reform targets.

Competitive Advantages and Market Positioning #

UBI’s competitive advantages include:

• Major Public Sector Bank (PSB): Significant Government of India ownership (74.76% as of March 31, 2024, post-QIP), providing stability and public trust.
• Extensive Network: 8,466 branches (59% in rural/semi-urban areas) and 8,982 ATMs ensuring wide reach and supports financial inclusion.
• Successful Amalgamation: Integration of Andhra Bank and Corporation Bank in 2020 significantly scaled operations and customer base.
• Digital Innovation: Early adoption of 100% core banking and continuous enhancement of digital offerings like the Vyom app and numerous digital lending products.
• Strong Financial Performance: High profitability, improved asset quality, and robust capital adequacy (CRAR 16.97%) in FY24.
• Priority Sector Lending: Focus on MSME (₹1,35,761 crore advances) and agriculture (₹1,83,833 crore advances) aligns with national objectives. Market share in export credit stood at 8.05% as of December 2023.

Key challenge: Stiff competition for CASA deposits.

Innovation Initiatives and R&D Effectiveness #

UBI’s innovation strategy focuses on digital transformation and emerging technologies:

• Digital Business Platform: Co-created with IBM, aiming for omni-channel capabilities and hyper-personalization.
• Vyom Super App: Over 400 features and significant user adoption (2.68 crore users, 24 lakh+ daily logins).
• Digital Lending Journeys: Rolled out 24 end-to-end digital journeys, processing over ₹8,300 crore in digital business in FY24.
• Emerging Technologies: Exploration of Metaverse (‘Uni-verse’ lounge with 3.66 lakh hits), AI/ML (for fraud detection, customer analytics by ACoE), and blockchain technology (IBBIC participation).
• RBI’s CBDC Pilot: Participation in the pilot program.
• Fintech Partnerships: Actively pursued (84 empanelled, 18 onboarded) to accelerate digital product development.
• Effectiveness: Demonstrated through increased digital transactions, mobilization of business via digital channels, successful implementation of VR-based training modules, and industry awards.
• Centres of Excellence: Cybersecurity Centre of Excellence (CCoE) and Analytics Centre of Excellence (ACoE) institutionalize innovation.

M&A Strategy and Execution #

The FY2023-24 report does not articulate a specific, ongoing M&A strategy. The strategic focus appears to be on organic growth, leveraging the expanded scale from the previous merger, driving digital transformation, enhancing customer experience, and improving financial metrics.

Management’s Track Record in Execution #

Management demonstrated a strong execution track record in FY2023-24:

• Financial Performance: Delivered all-time high net profit of ₹13,648 crore (61.84% YoY growth), significantly improved asset quality with Gross NPA ratio down by 277 bps to 4.76% and Net NPA ratio by 67 bps to 1.03%, and strengthened CRAR to 16.97%.
• Capital Raising: Successfully raised ₹8,000 crore through Qualified Institutional Placement (QIP) in two tranches (₹5,000 Cr + ₹3,000 Cr).

ESG Framework #

Environmental Metrics and Targets #

Greenhouse Gas (GHG) Emissions (FY2024) #

• Scope 1: 272,216 metric tonnes of CO2 equivalent (FY23: 274,042).
• Scope 2: 180,387 metric tonnes of CO2 equivalent (FY23: 241,884).

Energy Consumption (FY2024) #

• Total energy consumption: 819,494 GJ (FY23: 892,587 GJ).
• Electricity consumption: 705,864 GJ.
• Fuel consumption: 103,775 GJ.
• Renewable energy purchased/generated: 9,855 GJ (FY23: 12,339 GJ). Bank targets 50% of energy requirements via renewable sources. Installed 2 MW rooftop solar capacity generating 3,427,597 units annually.

Water Management (FY2024) #

• Total water consumption: 215,234 kilolitres.
• Initiatives: Rainwater harvesting systems, water-efficient fixtures.

Waste Management (FY2024) #

• Total waste generated: 11,278 tonnes.
• E-waste managed: 1.11 MT.
• Plastic waste: 198.20 MT.
• Battery waste: 0.72 MT.
• Strategy: Zero Waste Strategy aiming for 100% reuse, repurpose, or recycling, engaging supply chain partners.

Targets #

• Net-zero emissions by 2070.
• Continued reduction in energy and water consumption, waste to landfills.
• Expansion of solar installations.

Social Responsibility Programs #

Financial Inclusion #

• PMJDY Accounts: 2.95 crore accounts with ₹10,918 crore balance as of March 31, 2024.
• Street Vendors (PMSVANidhi): Financed over 2.98 lakh vendors with approx. ₹481 crore in FY2024.
• Agricultural Advances: ₹1,83,833 crore outstanding (20.95% YoY growth); 4.11 lakh new Kisan Credit Cards issued (₹6,896.45 crore).
• MSME Advances: ₹1,35,748 crore (8.58% YoY growth). Specialized Union MSME First Branches (105 branches, ₹10,189 crore portfolio).

Community Development & CSR #

• Total CSR Approved Donation (Bank): ₹79.33 crore in FY2024.
• Union Bank Social Foundation Trust (UBSFT)

Union Bank of India (FY 2023-24) - Forward Outlook #

Management Guidance and Assumptions #

Union Bank of India’s (UBI) management guidance for FY 2024-25 and beyond is based on a strong Indian economic outlook, with an expected GDP growth of about 7.0% (RBI estimate) and CPI inflation falling to around 4.5%. The Bank intends to improve its performance in line with the banking industry, taking advantage of a “sweet spot” in the Indian economy marked by strong GDP growth and supportive policy changes. Key assumptions include continued credit demand (expected double-digit growth for the sector), effective monetary policy transmission, and a stable interest rate environment. Management expects that continued government emphasis on capital expenditure will encourage private investment, boosting overall economic activity. A normal monsoon is also expected to boost rural demand. The Bank expects that increased digital adoption by customers and the successful completion of its internal digital and HR transformation projects (e.g., Vyom app, Ekam project) will increase efficiency and customer engagement.

Market Growth and Industry Outlook #

In FY24, the Indian banking sector performed exceptionally well, with rising profitability and improved asset quality. Credit growth significantly outpaced deposit growth, a trend expected to continue, albeit with credit growth moderating from decade-high levels. The banking system as a whole is well-capitalized. UBI’s management predicts robust banking sector growth driven by stable interest rates, strong GDP, declining inflation, and government focus on development and infrastructure spending. Global economic growth is expected to remain at 3.2% (IMF), while Asia’s GDP is expected to increase by 4.5% in 2024, with India being a major driver (projected real GDP growth of 6.8% in 2024 by IMF). Deposit growth for the Indian banking system is predicted at 12-13% in FY25, indicating continued competition for liabilities.

Strategic Initiatives and Focus Areas #

UBI’s strategic focus is on “Customer Centricity with Innovative Technology,” digital excellence, and sustainability. Key initiatives include:

1. Digital Transformation: Continued investment in the Digital Business Platform (with IBM), aiming for 100+ digital journeys and a Super App. Enhancement of the Vyom mobile app (400+ features, 2.68 crore users), CRM solutions, and participation in CBDC. Leveraging AI/ML, RPA (Robotic Process Automation Centre of Excellence planned), and exploring Generative AI.
2. Liability Focus: Prioritizing growth in CASA and retail customer deposits to calibrate credit growth. Introduction of tailored products like Union Samman (pensioners), Union Samriddhi (women), and Union Udaan (young professionals).
3. Credit Management: Enhancing underwriting capabilities, verticalization, and analytics. Focus on RAM (Retail, Agriculture, MSME) segment growth (13.82% YoY in FY24). Agriculture advances grew 20.95% and MSME by 8.58% in FY24.
4. Sustainability (ESG): Integrating ESG into business strategy with a Board-approved ESG Risk Framework and Climate Risk Policy. Significant financing for renewable energy (₹23,059 crore sanctioned by FY24-end) and green initiatives (Union Green Miles, Union Roof Top Solar). Aiming for net-zero emissions by 2070.
5. Risk Management & Compliance: Strengthening assurance frameworks, predictive analytics for EWS, real-time transaction monitoring, and robust cybersecurity through the Cybersecurity Centre of Excellence (CCoE). Adherence to macro-prudential norms from RBI.
6. Human Capital: HR Transformation via “Ekam” project for digital HR tools, talent pool strengthening, and DEI initiatives. “Union SWAR” program for employee well-being.
7. Operational Excellence (EASE Reforms): Improving branch banking experience, enhancing customer self-service, digital lending, unified call centre experience, and automation.

Capital Expenditure and Investment Plans #

UBI has planned significant capital mobilization and deployment. The AGM notice proposes raising up to ₹10,000 crore:

• Equity Shares: Up to ₹6,000 crore (QIP, FPO, Rights Issue, etc.)
• Additional Tier-1 Bonds: Up to ₹2,000 crore (including Green/Foreign Currency Denominated)
• Tier-2 Bonds: Up to ₹2,000 crore (including Green/Foreign Currency Denominated)

This capital will be utilized for augmenting Tier-1 capital, supporting business growth, general lending purposes, and funding strategic initiatives. Investments are focused on:

• Technology Infrastructure: Digital Business Platform, Vyom app enhancements, CRM, AI/ML capabilities (Data Lake project), Cybersecurity Centre of Excellence.
• Green Initiatives: Financing renewable energy projects, converting premises to green buildings, and promoting

Financial Analysis Report: Union Bank of India (FY 2023-24) #

Auditor’s Opinion and Qualifications #

The Standalone Financial Statements of Union Bank of India for the year ended March 31, 2024, received an unmodified opinion from the statutory central auditors. The auditors confirmed that the financial statements provide a true and fair view of the Bank’s state of affairs, profit, and cash flows, in conformity with Indian GAAP, the Banking Regulation Act, 1949, and RBI guidelines. (Standalone Auditors’ Report, pg 300)

The Consolidated Financial Statements for the same period also received an unmodified opinion, indicating they give a true and fair view of the Group’s consolidated financial position, performance, and cash flows. (Consolidated Auditors’ Report, pg 370)

Key Audit Matters (KAMs) #

Key Audit Matters highlighted by the auditors for both Standalone and Consolidated statements include:

• Income Recognition, Asset Classification (IRAC) and provisioning on Loans & Advances and Investments.
• Information Technology (IT) systems and controls impacting financial reporting.
• Recognition and measurement of Deferred Tax Assets.
• Assessment of Provisions, Contingent Liabilities, and Claims.

(Standalone Auditors’ Report, pg 300-302; Consolidated Auditors’ Report, pg 370-372)

No qualifications, reservations, or adverse remarks were made concerning the maintenance of accounts or other connected matters. (Standalone Auditors’ Report, pg 303, para 10(d))

Key Accounting Policies #

The financial statements are prepared under the historical cost convention on an accrual basis, conforming to Indian GAAP, RBI guidelines, and applicable Accounting Standards (AS) issued by ICAI. (Significant Accounting Policies, pg 305, 405)

Key accounting policies include:

• Revenue Recognition: Income and expenditure are on an accrual basis, except for income on Non-Performing Assets (NPAs), which is recognized on realization. Commission on Letters of Guarantee/Credit is on an accrual basis. (pg 305, 406)
• Investments: Classified into ‘Held to Maturity’ (HTM), ‘Available for Sale’ (AFS), and ‘Held for Trading’ (HFT). HTM investments are at acquisition cost (premium amortized, discount not recognized until sale/redemption for interest-bearing securities; ZCB discount accreted). AFS and HFT investments are marked-to-market scrip-wise, with net depreciation charged to P&L and net appreciation ignored. (pg 306, 406-407)
• Advances: Classified as Standard, Sub-standard, Doubtful, and Loss assets with provisions made as per RBI norms. (pg 307, 407)
• Fixed Assets: Stated at cost less accumulated depreciation and impairment. Depreciation is on a Straight-Line Method (SLM) based on Bank-prescribed rates. (pg 308, 408)
• Employee Benefits: Defined contribution plans (NPS) are charged as incurred. Defined benefit plans (gratuity, pension, leave encashment) are provided based on actuarial valuation using the Projected Unit Credit method. (pg 308-309, 409)
• Taxation: Provision