Despite delivering robust financial results for the June quarter, City Union Bank shares fell nearly 5% in early trade on Wednesday to ₹227.9 on the NSE, down from its previous close of ₹238.14, while the Nifty 50 was up about 1%. As per latest market reports, investors appeared to look beyond the headline earnings, focusing instead on the bank's overall performance, including growth in core income, asset quality and other key operating metrics. The market reaction suggests that while the strong earnings were well-received, investors may have been expecting even better performance given the bank's track record.
City Union Bank delivered robust financial results for the June quarter, with Net Interest Income growing 31% year-on-year to ₹820 crore from ₹625 crore in the corresponding period last year. According to reports from The Hindu BusinessLine, the bank's standalone net profit increased 25% to ₹383 crore compared to ₹306 crore in the same quarter last year. The strong performance was driven by improved operational efficiency and better asset quality metrics. Net Interest Margin stood at 3.78% in comparison to 3.54% a year ago, reflecting healthy growth in the bank's lending business. Total Operating Income rose 23.65% to ₹1,984.99 crore against ₹1,605.33 crore in the year-ago quarter, indicating strong revenue growth across all business segments. As per The Hindu BusinessLine, the bank's growth was in line with expectations for the fiscal year, with advances growth coming alongside improving asset quality.
The bank demonstrated significant improvement in asset quality on a sequential and year-on-year basis. Gross NPAs declined to 1.73% from 2.99% in Q1 FY26, while Net NPA improved to 0.61% from 1.20% in the previous year. As reported by The Hindu BusinessLine, both GNPA and NNPA have shown sequential decrease in the last 12 quarters, with the bank noting that the improvement reflects enhanced credit management and recovery efforts. Provisions for the quarter stood at ₹78 crore compared with ₹120 crore in the same period last year, with sequential provisioning declining sharply from ₹120 crore reported in the March quarter. The provision coverage ratio (PCR) stood at 85% including technical write-offs and 65% excluding technical write-offs.
The bank's core operating performance showed strong momentum with operating profit before provisions and contingencies growing 28.76% YoY to ₹580.57 crore against ₹451 crore in the year-ago quarter. According to The Hindu BusinessLine, operating profit margin (OPM) improved to 71.73% from 69.59% in the previous year, demonstrating enhanced operational efficiency. Return on assets was at 1.57% in comparison to 1.55% in the same quarter of the previous fiscal, while loan growth for the quarter stood at 25%, demonstrating the bank's ability to expand its lending portfolio effectively. Total provisions for the quarter stood at ₹198 crore, compared with ₹145 crore in the corresponding quarter last year.
The bank continued to witness healthy business growth with total deposits rising 21% YoY to ₹79,342 crore as of 30 June 2026, with deposits largely coming from retail deposits, which make up over 50% of bulk deposits. As reported by The Hindu BusinessLine, total advances increased 25% YoY to ₹67,645 crore, while CASA deposits grew 18% to ₹21,094 crore. The bank maintained a strong capital position with its capital adequacy ratio under Basel III norms at 21.73% and Tier-I capital adequacy at 20.97% as of 30 June 2026, well above the regulatory requirement. City Union Bank operates as an old sector private sector bank with 1,000 branches across 17 states and 3 Union territories.
Managing Director and CEO Vijay Anandh expressed optimism about the bank's future prospects, stating that the bank is on track for about 20% business growth in FY27. According to The Hindu BusinessLine, the bank has disbursed around ₹800 crore under the current iteration of ECLGS 5.0, which has helped manage working capital stress due to the West Asia war. Anandh noted positive outlook for FY27 particularly from MSMEs in the textile sector, with optimism in the Tirupur cluster for UK FTAs. Regarding foreign currency deposits, the bank has managed to raise around ₹200 crore in FCNR-B deposits by offering among the highest rates of 7.1%, despite being constrained without an overseas presence, with advanced discussions ongoing for leverage support.
