Union Bank of India (UBI) is a well-managed public sector bank with a strong track record of profitability and growth. In recent years, FII investment in the bank has also increased. Moreover, the stock price has given investors a return of over 300% in the past three years. With sound financial parameters, is UBI stock worth your investment? Check out the article
Weekly Chart Shows Over 300% Growth
The bank has been performing well in recent years, and its stock price has given investors a return of over 300% in the past three years.
The weekly chart of Union Bank of India (UBI) shows that the stock price has been in a strong uptrend since early 2023. The stock has made a series of higher highs and higher lows, and has broken out above several key resistance levels.
Should you consider investing in Union Bank of India stock?
There are a few factors that investors should consider before investing in Union Bank of India stock
- Strong fundamentals: UBI has a healthy balance sheet, with a strong capital adequacy ratio and low NPAs. The bank is also well-capitalized to support its growth plans.
- Government support: The Indian government has taken a number of initiatives to support the banking sector, which has benefited UBI.
- Economic growth: The Indian economy is expected to grow strongly in the coming years, which will boost demand for banking services.
- Digitization: UBI is investing heavily in digitization to improve its efficiency and customer service.
- Growing FII investment: FII investment in UBI has been growing in recent years, which is a testament to the bank’s strong fundamentals and growth potential.
Union Bank Of India Financial Health: Q1FY23-24 Highlights
- Strong Financial Performance: In Q1FY24, UBI exhibited a remarkable financial performance, with a net profit increase of 107.67% on a YoY basis. Additionally, the net interest income of the bank grew by 16.59% on a YoY basis during the same period.
- Liability Franchise: UBI continues to demonstrate a robust liability franchise, with CASA (Current Account and Savings Account) deposits increasing by 7.17% YoY. As of June 30, 2023, the bank’s total deposits stood at Rs. 11,28,052 Crores.
- Business Growth: The bank’s total business expanded significantly, increasing by 13.08% YoY. This growth was attributed to a 12.33% YoY increase in gross advances and a 13.63% YoY growth in total deposits, resulting in a total business size of Rs. 19,46,509 Crores as of June 30, 2023.
- Credit in RAM Segments: UBI experienced substantial growth in the Retail, Agriculture, and MSME (RAM) segments, with a 14.92% YoY increase. This growth was distributed across the board, with a 16.47% growth in Retail, 13.37% growth in Agriculture, and a 14.88% growth in MSME advances on a YoY basis. RAM advances accounted for 55.92% of domestic advances.
- Reduction in NPA: Notably, the bank achieved a significant reduction in Non-Performing Assets (NPAs). Gross NPA decreased by 288 basis points (bps) on a YoY basis to 7.34%, and Net NPA reduced by 173 bps YoY to 1.58% as of June 30, 2023.
- Strong Capital Ratios: The Capital to Risk-Weighted Assets Ratio (CRAR) improved from 14.42% as of June 30, 2022, to 15.95% as of June 30, 2023. The Common Equity Tier 1 (CET1) ratio also increased to 12.34% from 10.68% in the same period.
- Cost Efficiency and Improved Returns: Due to reductions in Cost to Income and Credit Cost ratios, the bank’s Return on Assets (ROA) and Return on Equity (ROE) improved to 1% and 18.97%, respectively.
For investors exploring opportunities in the Indian economy, banking sector with government support, Union Bank’s massive growth and these underlying factors make it a noteworthy consideration. However, due diligence and individual financial goals should guide investment decisions.
Disclaimer: (This information is provided solely for informational purposes. It is important to note that investing in the market or a business idea involves market risks. Before investing money as an investor/ owner/ partner, always consult an expert. DNP News Network Private Limited never advises to invest money on stocks or any specific business idea. We will not be liable for any financial losses.)