Union Bank of India, a leading PSU lender, disclosed its plans for a qualified institutional placement (QIP) amounting to Rs 3,000 crore, as announced on Tuesday.
The Committee of Directors for Raising Capital Funds approved this capital-raising initiative during its meeting on February 20, 2024. The floor price for the QIP is set at Rs 142.78 per share, representing a marginal premium over the closing price of Rs 141.2 on Tuesday, as reported in the stock exchange filing.
The issue, effective from February 20, is expected to bolster the bank’s financial position. Union Bank of India’s scrip has a 52-week high of Rs 155.35 and a 52-week low of Rs 60.35.
In its recent financial performance, the bank posted a notable 60% surge in net profit, reaching Rs 3,590 crore for the December quarter. This growth is attributed to lower provisioning and improved interest income. The total income rose to Rs 29,137 crore, reflecting an uptick from Rs 24,154 crore in the same quarter last year.
Union Bank of India’s gross Non-Performing Asset (NPA) ratio showed improvement, standing at 4.83% as of December 31, 2023, compared to 7.93% a year ago. The net NPA also declined to 1.08% from 2.14% at the end of December 2022.
Notably, provisioning for bad loans decreased to Rs 1,226 crore during the quarter, down from Rs 2,443 crore in the corresponding period last year.
The bank’s recent inclusion in the MSCI Global Standard index during the February 2024 quarterly review reflects its notable performance, contributing to a 21% rally in the past three months.
Union Bank of India aims to utilize the proceeds from the QIP to reinforce its position and further drive growth in the evolving financial landscape.