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.)
Keep watching our YouTube Channel ‘DNP INDIA’. Also, please subscribe and follow us on FACEBOOK, INSTAGRAM, and TWITTER