Mumbai, Oct. 24: The Union Bank of India today lowered interest rates on deposits of various maturities by 25-100 basis points.

ICICI Bank had recently brought down the interest rate on its special deposits by 50 basis points.

The one percentage point (100 basis points) revision by the Union Bank is perhaps the steepest cut announced recently. Analysts said the reduction was an effort by the public sector bank to maintain its margins. Many banks have brought down interest rates on new home, car and personal loans.

The bank said the revision would be effective from today. The rate of interest on deposits for one year has been reduced to 8.25 per cent from 9 per cent and for deposits maturing in three to five years, the interest has been lowered to 8.75 per cent from 9 per cent. For deposits of 15-45 days, the revised interest rate will stand at 4 per cent from 5 per cent earlier.

The announcement came on a day when the Union Bank declared strong second-quarter numbers. Net profit for the quarter ended September 30 shot up to Rs 275.78 crore from Rs 194.16 crore in the same period last year, a growth of over 42 per cent. This growth came on the back of a robust performance both in its core business and other businesses such as distributing third-party products.

The bank was successful in bringing down its non performing assets (NPAs), but net interest margins for the quarter fell to 2.56 per cent from 2.76 per cent in the same period last year, reflecting the impact of high interest rates on deposits.

M.V. Nair, chairman and managing director of Union Bank, said the bank hoped to attain a 25 per cent growth in advances and a 23 per cent rise in deposits by March next year. Net interest margins of the bank are also expected to breach the 3-per-cent-mark over this period. He added that the bank was planning to raise resources by issuing bonds to meet Basel II requirements.

During the period ended September 30, the deposits and advances of the bank improved by 16.74 per cent to Rs 1,63,399 crore from Rs 1,39,972 crore as on September 30, 2006.

Total deposits touched Rs 94,804 crore from Rs 78,528 crore in the previous year. The period also saw gross NPAs coming down to Rs 1,659 crore from Rs 2,016 crore, while net NPAs were reduced to Rs 437 crore from Rs 744 crore.