United Bank spikes on receiving capital infusion

The government will infuse Rs. 2,159 crore capital through preferential allotment in the state-run United Bank of India (UBI), the lender informed the exchanges on Thursday.

Central Government, in a letter dated December 26, 2018, has informed of its decision to invest Rs. 2,159 crore in the equity capital of the bank by preferential allotment. The lender is one of the 11 public sector banks that are under the prompt corrective action (PCA) framework of the Reserve Bank of India following deterioration in its financial health.

During the July-September quarter, UBI’s net losses widened to Rs. 883.2 crore from Rs. 344.8 crore in the year-ago period on the back of higher provisioning. The gross NPA ratio was at 22.69 per cent and net NPA ratio was at 14.36 per cent as of the end September 2018.

Earlier this month, the government sought Parliament’s approval to infuse Rs. 41,000 crore in the public sector banks. The capital infusion will help the banks improve their capital adequacy ratio. With this capital infusion, some of the banks that are under PCA may come out of the framework.

On Friday, the stock of United Bank opened at Rs. 13.20 per share and touched a high/low of Rs. 13.30/12.30 per share. At 11:49 hours, the stock of United Bank was at Rs. 12.46 per share, up by 8.07 per cent.