Union Bank of India rose 3.69% to Rs 257.40 at 11:34 IST after net profit rose 39.7% to Rs 505.10 crore on a 20.8% increase in operating income to Rs 3760.90 crore in Q2 September 2009 over Q2 September 2008.
The result was announced during trading hours on Monday, 26 October 2009, when the stock had plunged 6.78% to Rs 248.25. The stock corrected 8.49% in two sessions to Rs 248.25 on Monday, 26 October 2009, from Rs 271.30 on 22 October 2009.
Meanwhile, the BSE Sensex was down 110.07 points, or 0.66%, to 16630.43.
On BSE, 1.03 lakh shares were traded in the counter as against an average daily volume of 1.97 lakh shares in the past one quarter.
The stock hit a high of Rs 259.90 and a low of Rs 245.65 so far during the day. The stock had hit a 52-week high of Rs 281.75 on 23 October 2009 and a 52-week low of Rs 113.15 on 27 October 2008.
The stock had outperformed the market over the past one month till 26 October 2009, rising 1.85% as compared to the Sensex 0.28% rise. It outperformed the market in past one quarter, rising 5.93% as against 8.85% rise in the Sensex.
The large-cap state-run bank has an equity capital of Rs 505.12 crore. Face value per share is Rs 10.
The current price of Rs 257.40 discounts the company's Q2 September 2009 annualised EPS of Rs 40, by a PE multiple of 6.43.
The earnings beat market forecast, but the economic slowdown is expected to mute bank's growth for the rest of the year.
The bank pruned its advances target for the year from an earlier projected 25% to 18% on the back of the economic slowdown, which has hit industrial growth and consequently, lending activity.
The bank's net interest margin widened to 2.34% during Q2 September 2009 from 2.27% in Q1 June 2009. The bank did not provide figures for its margins from a year earlier.
Quarterly net interest income--the difference between interest earned and interest paid--declined by 11% to Rs 864 crore in Q2 September 2009 over Q2 September 2008.
The bank reported a 33% fall in provisions for bad loans to Rs 135 crore.
Total expenditure rose 22% to Rs 2951 crore, driven by a 9% increase in operating expenses to Rs 609 crore and a 13% appreciation in other operating expenses to Rs 303 crore.
Interest expenses grew 26% to Rs 3206 crore from Rs 2829 crore while tax expenses also rose 26% to Rs 170 crore.
Net bad loans as a percentage of the total loan book grew to 1.25% from 1.12% a year earlier, the bank said. It has, however, hiked its bad loan projection for the year.
The bank's chairman and managing director, M V Nair put a conservative projection of 2% for gross non-performing assets (bad loans) for this year from the earlier projection of 1.75%.
Union Bank of India operates in four segments, namely treasury, retail banking, corporate banking and other banking operations.
The Government of India holds 55.43% stake in the bank (as on 30 September 2009).