Union Bank surpasses Rs. 1L crore valuation; joins SBI, PNB
Union Bank of India has emerged as the fourth public sector lender to cross the Rs. 1 lakh crore market value. The bank's stock rallied 2.4% in today's session to reach a 52-week high of Rs. 140.15, hitting a valuation of Rs. 1.01 lakh crore. Since January 1, 2024, its shares have soared over 15%. The other three PSU lenders that have achieved this milestone are State Bank of India, Bank of Baroda, and Punjab National Bank.
Strong performance of public sector companies, undervaluation of PSU banks
Experts credit Union Bank's success to the strong performance of public sector companies and the undervaluation of PSU banks compared to their private counterparts. Public sector banks have improved their balance sheets, boasting better asset quality through low slippage ratios and reduced credit costs. Union Bank reported a 90% year-on-year increase in net profit, amounting to Rs. 3,511.4 crore for the quarter ending September 30, 2023, compared to Rs. 1,848 crore the previous year.
Growth in interest income, lower NPAs, better asset quality
The bank's net interest income (NII) rose by 10% to Rs. 9,126.1 crore in September 2023 from Rs. 8,305 in 2022. Its gross non-performing asset (GNPA) ratio fell to 6.38% in the September quarter, down from 7.34% in the June quarter. Net NPA decreased to 1.30% from 1.58% quarter-on-quarter. Motilal Oswal has upgraded targets for public sector banks and issued a 'buy' rating. Union Bank's new target has been raised to Rs. 150 share.
