Union Bank of India delivered exceptional Q1 FY27 results with standalone net profit surging 29.5% year-on-year to ₹5,332 crore for the quarter ended June 30, 2026, as reported by The Hindu BusinessLine. The state-owned lender's performance was driven by healthy growth in net interest income and operating profit, with profit increasing from ₹4,116 crore in the corresponding quarter last year. On a sequential basis, profit remained broadly flat, edging up just 0.02% from ₹5,331.76 crore reported in the March 2026 quarter. The bank's net interest income (NII) increased 10.1% YoY to ₹10,037 crore from ₹9,113 crore in the year-ago quarter, while net interest margin (NIM) improved marginally by 0.04% YoY to 2.80% from 2.76% in the previous year. Non-interest income rose 2.6% YoY to ₹4,603 crore in the June quarter from ₹4,486 crore year earlier, though it declined 15% sequentially from ₹5,412 crore in the March quarter. Within this, fee-based income surged 45% YoY to ₹3,215 crore from ₹2,218 crore, while treasury income fell 54.5% YoY to ₹645 crore from ₹1,418 crore. As per IDBI Capital, net interest margin expanded 16 basis points quarter-on-quarter to 2.80%, with management guiding further margin improvements ahead.
Union Bank successfully attracted USD 106 million in FCNR-B deposits through the RBI's special foreign currency non-resident (B) window, with plans to raise USD 1.5-2 billion by September 2026. As per The Hindu BusinessLine, MD and CEO Asheesh Pandey expressed confidence that margins can be improved further despite the evolving interest-rate environment. The bank has established five dedicated NRI branches and identified another 20 branches with large NRI customer base for focused mobilization campaigns. Pandey noted that deposits have been garnered from several locations, including Australia and the UAE, with the bank currently offering interest rates of 6.10-6.60% and comfortable with these rates. The central bank introduced the special FCNR-B window during the June monetary policy committee meeting, including bearing the cost of currency hedging, to increase foreign capital inflows and bolster India's external position. Additionally, the bank is targeting Overseas Foreign Currency Borrowings (OFCBs) of around $200-300 million to further diversify its funding sources.
Union Bank demonstrated strong operational efficiency with operating expenses declining 0.78% to ₹6,638 crore in Q1 FY27 from ₹6,690 crore in the June 2025 quarter. This cost management contributed to the bank's operating profit of ₹8,003 crore, marking a 15.83% YoY increase from the previous year and crossing the ₹8,000-crore mark for the first time. The bank's profit before tax stood at ₹7,066.86 crore, representing a significant 34% increase from ₹5,268.68 crore in Q1 FY26. Provisions and contingencies dropped substantially by 41.16% to ₹979.42 crore in Q1 FY27 from ₹1,664.51 crore in the same quarter a year ago, reflecting improved asset quality management and better risk assessment. On the liabilities side, global deposits rose 3.5% YoY to ₹12.83 trillion from ₹12.39 trillion a year ago, while domestic deposits increased 3.49% to ₹12.83 trillion. The bank's low-cost, current account and savings account (CASA) deposits increased 11.73% YoY to ₹4.50 lakh crore, with the CASA ratio improving significantly to 35.09% from 32.51% in Q1FY26, demonstrating enhanced deposit mix optimization. Bulk term deposits declined to ₹2.52 trillion from ₹2.76 trillion at the end of March 2026, marking a reduction of ₹24,907 crore, or about 9% sequentially, while Casa plus retail term deposits increased to ₹10.31 trillion.
Union Bank's asset quality showed continued improvement with gross NPA ratio declining to 2.65% as of June 30, 2026, from 3.52% in the June 2025 period, representing a significant sequential improvement from 3.06% a year ago. The net NPA ratio fell to 0.47% from 0.62% in the corresponding quarter last year and 0.48% in the previous quarter. The slippage ratio also improved to 0.82% from 0.99% in the year-ago quarter, demonstrating enhanced asset quality management. In absolute terms, gross NPAs fell to ₹29,093 crore from ₹30,400.7 crore in the previous quarter, while net NPAs declined to ₹5,017 crore from ₹5,067 crore. The bank's global advances grew 12.5% YoY to ₹10.96 trillion from ₹9.74 trillion, with domestic advances rising 13.1% to ₹10.61 trillion. Retail loans increased 12.1% to ₹2.57 trillion from ₹2.29 trillion, while RAM advances expanded 11.6% to ₹6.08 trillion. Total business increased by 7.46% YoY to ₹23,79,697 crore as of June 30, 2026. The growth in domestic advances was powered by a 16.49% increase in MSME advances, followed by large corporates (15.32%), retail (12.06%), and agriculture (6.75%). As per IDBI Capital, asset quality remained among the strongest with gross NPA/net NPA at 2.65%/0.47% vs 2.82%/0.48% QoQ, provision coverage ratio at 95.05%, and SMA balances (> ₹5 crore) declining to a record low of ₹2,380 crore.
Union Bank's capital position remained robust with CRAR standing at a comfortable 18.46%, leaving the estimated ₹11,300 crore ECL transition manageable, as reported by IDBI Capital. Management indicated that even a fully front-loaded implementation would reduce capital by only ~56 bps, while ₹5,500 crore has already been set aside as an additional contingency provision. The outlook is supported by a gradual shift toward higher-yielding assets, an improving funding mix, and the retirement of expensive legacy borrowings. During the quarter, ₹850 crore of expensive legacy borrowings were redeemed, with another ₹2,500 crore carrying coupons of up to 9% eligible for call. Motilal Oswal has recommended a Neutral rating on Union Bank of India with a target price of ₹190 in its research report dated July 15, 2026, citing the bank's strong operational performance and improving asset quality metrics. The brokerage projects FY27E RoA/RoE at 1.3%/15.3% and maintains a multiple of 0.9x on March 2028 adjusted book value. The bank continues to reduce reliance on wholesale deposits while building CASA and retail term deposits, with the target to reduce wholesale deposits to below 15% from 20% of total deposits.
