UNION BANK 2023-24 Annual Report Analysis

Fri, 28 Jun

UNION BANK has announced its results for the year ended March 2024. Let us have a look at the detailed performance review of the bank during the year 2023-24.

UNION BANK Income Statement Analysis

• Interest income during the year rose 23.7% on a year-on-year (YoY) basis.
• Interest expenses were up by 31.9% YoY during the same period.
• Operating expenses increased by 12.9% YoY during the year.
• The bank's net interest income (NII) increased by 11.7% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a growth and stood at 3.0% in FY24 as against 3.0% in FY23.
• Other income increased by 11.9% YoY during the year.
• Net profit for the year increased by 62.1% YoY.
• Net profit margins during the year increased to 13.7% in FY24 from 10.5% in FY23.

UNION BANK Income Statement – 2023-24

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Interest Income	Rs m	811,632	1,003,756	23.7%
Other Income	Rs m	159,154	178,128	11.9%
Interest Expense	Rs m	480,328	633,637	31.9%
Net Interest Income	Rs m	331,303	370,119	11.7%
Operating Expense	Rs m	234,873	265,058	12.9%
Pre-provision Operating Profit	Rs m	255,584	283,188	10.8%
Provisions & Contingencies	Rs m	171,280	146,099	-14.7%
Profit before tax	Rs m	121,465	215,082	77.1%
Tax	Rs m	37,162	77,993	109.9%
Profit after tax	Rs m	85,117	137,971	62.1%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	3.0	3.0
Net profit margin	%	10.5	13.7

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UNION BANK Balance Sheet Analysis

• The bank's deposits during FY24 stood at Rs 12,245.9 bn as compared to Rs 11,203.2 bn in FY23, thereby witnessing an increase of 9.3%.
• Advances for the year stood at Rs 8,740.8 bn as compared to Rs 7,642.8 bn during FY23, a rise of 14.4%.
• Cost of deposits for UNION BANK rose 20.9% and stood at 4.8%, while yield on advances rose to 8.3%.
• The lender's investments rose to Rs 3,439.5 bn during the year from Rs 3,437.3 bn in FY23.
• Borrowing stood at Rs 269.7 bn, a fall of 36.9% as compared to previous year.
• Overall, the total assets and liabilities for FY24 stood at Rs 14,020.0 bn as against Rs 12,883.6 bn during FY23, thereby witnessing a rise of 8.8%.

UNION BANK Balance Sheet – as on March 2024

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Networth	Rs m	788,035	975,977	23.8%
Advances	Rs m	7,642,767	8,740,797	14.4%
Deposits	Rs m	11,203,219	12,245,934	9.3%
Yield on advances	%	7.4	8.3
Cost of Deposits	%	4.0	4.8
Investments	Rs m	3,437,270	3,439,529	0.1%
Borrowings	Rs m	427,366	269,743	-36.9%
Total Assets	Rs m	12,883,571	14,019,959	8.8%

Current Valuations for UNION BANK

• The trailing twelve-month earnings per share (EPS) of the bank stands at Rs 18.1, an improvement from the EPS of Rs 12.5 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 138.5, stands at 6.3 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 1.1 times, while the price to income ratio stands at 0.9 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Income per share (Unadj.)	Rs	118.8	131.5
Earnings per share (Unadj.)	Rs	12.5	18.1
Diluted earnings per share	Rs	11.2	18.1
Avg P/E ratio	Rs	5.2	6.3
Avg P/ABV ratio	Rs	0.7	1.1
Avg Market Cap	Rs	444,088	870,804
Dividends per share (Unadj.)	Rs	3.00	3.60

Ratio Analysis for UNION BANK

• Efficiency Ratios

  Credit/Deposit Ratio: The bank's credit/deposit ratio improved and stood at 71.4x during FY24, from 68.2x during FY23. The credit/deposit ratio tells us how much money a bank has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The bank's debt to equity ratio decreased and stood at 12.82x during FY24, from 14.76x during FY23. The debt to equity ratio of a bank tells us how much debt a bank uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): UNION BANK's capital adequacy ratio (CAR) was at 17.0% as on 31 March 2024 as compared to 16.0% a year ago. This ratio helps measure the financial strength of the bank or any finance company to meet their obligations using their assets and capital.

  A bank that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the bank's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a bank sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the bank is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that banks hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the bank improved and stood at 14.1% during FY24, from 10.8% during FY23. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the bank improved and stood at 0.98% during FY24, from 0.66% during FY23. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the bank improved and stood at 21.33% during FY24, from 12.97% during FY23. The ROCE measures the ability of a bank to generate profits from its total capital (shareholder capital plus debt capital) employed in the bank.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a bank's gross NPAs to gross advances. UNION BANK's gross NPA ratio stood at 4.8% as of 31 March 2024 compared to 7.5% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a bank's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the bank has made provisions.

  The net NPA ratio of UNION BANK was 1.0% in financial year 2024. This compared with 1.7% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Credit/Deposit Ratio	x	68.2	71.4
Debt to Equity Ratio	x	14.8	12.8
Loans / Deposits	x	0.0	0.0
Capital Adequacy Ratio	%	16.0	17.0
Return on Equity	%	10.8	14.1
Return on Assets	%	0.7	1.0
Return on Capital Employed	%	13.0	21.3
% of Gross NPAs	%	7.5	4.8
% of Net NPAs	%	1.7	1.0
Yield on Advances	x	7.4	8.3
Yield on Investments	x	6.5	7.2

To see how UNION BANK has performed over the last 5 years, please visit here.

UNION BANK Share Price Performance

Over the last one year, UNION BANK share price has moved up from Rs 70.7 to Rs 138.5, registering a gain of Rs 67.8 or around 95.9%.

Meanwhile, the S&P BSE BANKEX is trading at 60,210.9 (down 0.1%). Over the last one year it has moved up from 50,107.1 to 60,210.9, registering a gain of 10,103.8 points (up 20.2%).

Overall, the S&P BSE SENSEX is up 0.1% over the year.

(To know more, you can check out historical annual results for UNION BANK here and quarterly results for UNION BANK here)