United Bank hits upper circuit after announcing Q2 results

The stock of United Bank of India hit its upper circuit of 20 per cent before closing for trading at Rs. 8.9 per share on Wednesday. The surge in the stock price was due to improved financial results announced by the bank for Q2FY20.

The bank declared a net profit of Rs. 123.88 crore for Q2FY20 as against a net loss of Rs. 883.17 crore incurred in Q2FY19. For the quarter ended September 30, 2019 the bank reported interest earned of Rs. 2439.90 crore which is an increase by 14.92 per cent compared to that of Rs.2123.42 crore earned in Q2FY19. The bank’s total business for Q2FY20 stood at Rs.208725 crore with an increase of 6.06 per cent YoY. As deposits for the quarter grew by 3.33 per cent YoY to Rs. 134304 crore, advances also increased by 11.36 per cent YoY to Rs. 74421 crore. An improvement in the bank’s asset quality can be seen as the Net NPA for Q2FY20 stood at 7.88 per cent compared to 14.36 per cent in Q2FY19. Provision Coverage Ratio (PCR) improved to 74.89 per cent in Q2FY20 as against 60.10 per cent in Q2FY19.

As NPA recovery and stressed asset management stand as one of the biggest challenges for banks, United Bank of India reported of two fraudulent accounts belonging to power and steel sectors of outstanding Rs. 928.03 crore. The bank has received Rs. 1666 crore from the Government of India towards capital infusion under the PSBs recapitalization plan. The bank is set be merged with Punjab National Bank and Oriental Bank of Commerce.

On Wednesday, the stock of the bank surged by 19.95 per cent or an increase of Rs. 1.48 per share before locking in its upper circuit limit.