Union Bank of India on Wednesday approved the issue of 11.66 million shares to

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the government on a preferential basis. The preferential issue of shares will be done at a price arrived at in accordance with existing regulations of the market regulator, the Securities and Exchange Board of India, the bank said in a filing to stock exchanges.

“The government holding in the bank will move up to 58 per cent from 57.07 per cent at present and we expect about Rs 270 crore of fund infusion by March for our plans to expand by setting up 380 new branches,” Union Bank of India executive director SK Jain told Financial Chronicle. The tier-I capital, or core capital, of the bank will go up to 12 per cent from 11.74 per cent at present. The bank reported 66 per cent drop in net profit to Rs 197 crore due to additional Rs 443 crore provisioning on the restructured accounts for the quarter ended December 31, 2011. The incremental restructured asset during the quarter was Rs 2,042 crore.

MV Nair, chairman and managing director of Union Bank of India, said: “But for such huge provisions, net profit would have been much higher. We expect the downward trend in NPAs (non-performing assets) to continue.” Meanwhile, Bank of Baroda (BoB) — the third largest public sector bank by assets — reported 20.7 per cent rise in net profit at Rs 1,289.85 crore driven mainly by healthy growth in advances for the quarter ended December 31, 2011.

“The growth in operating profit was driven by a well-balanced growth in net interest income and other incomes combined with prudent control over operating expenses. Domestic net interest margins are 3.51 per cent,” said MD Mallya, chairman and managing director, Bank of Baroda.

Net interest income, or the difference between interests earned and paid out, increased by 15.8 per cent to Rs 2,655.51 crore. Other income went up by 70 per cent over the last year to Rs 1,149 crore driven mainly by the sale of investment of about Rs 100 crore, while Rs 400 crore came from treasury and Rs 70 crore from fee income.

Gross non-performing assets (NPAs) increased at 1.48 per cent from 1.41 per cent in the previous quarter. The bank made total provisions of Rs 836 crore for the quarter, which was a massive jump of 175 per cent from Rs 304 crore in a year-ago quarter.

Total income of the bank rose to Rs 8,821.32 crore during the third quarter from Rs 6,342.3 crore in the same period a year ago with revenues coming from interest income, fee income and other income.