UBI: On a fundraising spree
Shares of Union Bank of India (UBI) jumped 5% in Wedesday’s trade after the state-owned bank said it will raise up to Rs 1,000 crore from bonds to fund business growth.
The state owned lender is issuing Basel III compliant Tier II bonds in the nature of debentures aggregate issue size not exceeding Rs 1,000 crore, with a base issue size of up to Rs 500 crore and a Green Shoe option to retain oversubscription up to Rs 500 crore.
The bonds of face value of Rs 10 lakh each, bearing a coupon of 7.18% per annum, will have maturity of 15 years. The bonds have fixed allotment date of 26 November, 2020.
The Basel-III capital regulations are globally accepted banking norms under which banks need to improve and strengthen their capital planning processes.
UBI reported a net profit at Rs 517 crore for the quarter ended September, against a net loss of Rs 1,194 crore in the year-ago period.
The lender witnessed improvement in asset quality with the net non-performing assets ratio improving by 227 basis points to 4.13% from 6.40% in the year-ago period. Gross NPA ratio improved to 14.71% in the quarter under review from 15.75% in September 2019, leading to lower provisions towards credit losses. The lender made only Rs 3,721 crore in total provisions as against Rs 5,055 crore in the year-ago period.
Net interest income in the latest September quarter rose 6.1% to Rs 6,293 crore. Other income stood at Rs 2,308 crore, which included Rs 1,065 crore of treasury income, Rs 932 crore from sale of assets/ investments and Rs 232 crore recovery from written off assets.
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