PSU bank stock with high dividend yield and high ROCE to add to your watchlist

Company’s that have hige ROCE & High Dividend Yield usually offer several good fundamental combinations, like robust financial health, effective company management, and company’s that are investor friendly. These high ROCE and high dividend yield companies also offer a chance for investors to earn passive income from their investments.

With the best capital adequacy among PSU banks and strong operational metrics with higher GNPA reduction among peers, this Bank stock is worth a watch.

About the Company

Union Bank of India (UBI) is one of India’s largest public sector banks, headquartered in Mumbai. Established in 1919, the bank has grown significantly, especially after its merger with Andhra Bank and Corporation Bank in 2020, making it one of the top five largest PSU banks in India. UBI offers a wide range of banking and financial services, including retail banking, corporate banking, international banking, treasury operations, and digital banking.

Business Highlights

The company has 8,574 Branches & 9,087 ATMs across India, with 30 percent in Rural India, followed by 29 percent in Semi-urban, then Metro at 21 percent, and lastly, Urban areas at 20 percent. The company has overseas branches in Dubai & Sydney and a Banking subsidiary in London.

The Net Interest Income (NII) increased by 12 percent from Rs. 9,168 Crore in Q3FY24 to Rs. 9,240 Crore in Q3FY25. Gross Non-Performing Assets (GNPA) declined from Rs. 43,262 crores to Rs. 36,554, and Net Non-performing assets (NNPA) declined from 9,351 Crore to 7,568 Crore. Return on Assets (RoA) & Return on Equity (RoE) stood at 1.30 percent & 17.75 percent, respectively. GNPA & NNPA stood at 3.85 percent and 0.82 percen,t respectively.

Also read: Bank stock to buy now for an upside potential of 50%; Do you ow it?

Financial Highlights

The company reported a 6.32 percent YoY increase in revenue from Rs. 25,521 Crore in Q3FY24 to Rs. 27,135 Crore in Q3FY25. On a QoQ basis, the company reported an increase of 0.92 percent in revenue from Rs. 26,887 Crore in the previous quarter.

Their Net profit saw an increase of 27.53 percent YoY from Rs. 3,625 Crore to Rs. 4,623 Crore for the same period. On a QoQ basis, the company reported a decrease of 2.69 percent in Net profit from Rs. 4,751 Crore in the previous quarter.

Brokerage on Union Bank

Brokerage Prabhudas Lilladher had given a Buy rating on the stock with a target of Rs. 140, which is 16 percent upside from current levels. Citing the reasons like the decline in provisions, Lower Net Interest Margin fall, improvement in fee-to-asset ratio, best-in-class capital adequacy, and reduction in GNPA. 

Written By Abhishek Das

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