Union Bank of India — Q1 FY27 earnings call

Call held 15 Jul 2026

Management summary

Union Bank of India reported its highest ever profit in Q1 FY27, driven by robust NIM of 2.80% and a strong ROA of 1.36%. The bank maintained a healthy capital adequacy of 18.46% and significantly reduced its cost-to-income ratio by 500 bps. While acknowledging the gap in deposit growth and the remaining INR6,000 crores for ECL provisioning, management outlined strategies for sustainable credit growth and continued focus on asset quality.

Highlights

  • Highest ever profit achieved, surpassing previous records.

  • Return on Assets (ROA) maintained at 1.36% for the third consecutive quarter.

  • Net Interest Margin (NIM) reached its highest level at 2.80%.

  • Capital Adequacy Ratio (CAR) at 18.46%, providing robust capital for growth.

  • Cost-to-income ratio reduced by 500 basis points.

  • Liquidity Coverage Ratio (LCR) at 121 basis points, well above RBI threshold.

Concerns

  • Gap between deposit and loan growth, though management is focused on grassroots deposit mobilization.

  • Slight increase in SMA 2 by INR350 crores, though overall SMA numbers are down.

  • INR6,000 crores of additional provision still required for ECL implementation.

Key financials

  1. ROA 1.4%
  2. NIM 2.8%
  3. Capital Adequacy Ratio 18.5%
  4. CASA (average) ₹24,000 Cr
  5. Credit Growth 13%
  6. Cost of Deposit Reduction 18 bps

What they filed

Q1 FY27: revenue up 1.1%, net profit up 29.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue26,708 26,544 27,695 26,919 26,191 −2%26,443 −0%26,439 −5%27,203 +1%
Net profit4,720 4,604 4,985 4,116 4,249 −10%5,017 +9%5,316 +7%5,332 +30%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Liquidity Liquidity disclosed Liquidity Coverage Ratio (LCR) stands at an average of 121 basis points, with the board approved at 107% against an RBI threshold of 100%. This indicates a comfortable liquidity position with approximately INR42,000 crores in excess liquidity (21% above 100% threshold, where 1% equals INR2,000 crores).
    LCR our stands at average 121 basis points and our board approved is 107, RBI threshold is 100%. And 1 basis point means INR2,000 crores approximately, roughly. So 21% means around INR42,000 crores we are in a liquidity position comfortably.

Guidance & targets

Credit

  • Credit Growth Credit · going forward · Medium confidence industry level growth plus 1%
    But at the same time, the industry level growth plus 1% we aim forward

    — Asheesh Pandey

  • Credit Growth in RAM sectors Credit · going forward · Medium confidence 18% to 20%
    So, we are very sure that not only 11% to 12% or 14%, but we aim to move better than 18% to 20% in these three sectors going forward.

    — Asheesh Pandey

Deposit

  • Deposit Growth Deposit · going forward · Medium confidence similar range minus 2% somewhere
    So certainly in the similar range minus 2% somewhere deposit growth will continue.

    — Asheesh Pandey

  • FCNR Mobilization Deposit · till September · High confidence 1.5 to 2 billion
    And we aspire to not aspire, but it is an achievable we will be in the position to garner 1.5 to 2 billion going forward till September.

    — Asheesh Pandey

  • Bulk Deposit to Total Deposit Ratio Deposit · one year, two year, three year down the line · Medium confidence below 1.15 percentage points
    but to bring below bulk deposit to 1.15 percentage points.

    — Asheesh Pandey

Profitability

  • PSLC Income Profitability · full year · Medium confidence INR800 crores - INR900 crores
    So, we are planning on that, we already have implemented certain things, we are waiting for offshoot. So, we will see as we go ahead during quarter, because initially itself booking good numbers is also, I think a positive approach we have taken.

    — Asheesh Pandey

  • NIM Profitability · from here further more · Medium confidence improve upon the NIM
    but then from here we would like to improve upon the NIM.

    — Asheesh Pandey

Provisioning

  • ECL Provisioning (remaining) Provisioning · by March 31, 2027 · High confidence INR6,000 crores
    So, it was around INR6,000 crores is remaining.

    — Asheesh Pandey

What to watch in Q2 FY27

NIM Improvement

Next quarter / going forward
Current 2.80%
Target Improved from current level

Why it matters

NIM is a key profitability driver for banks, and management has guided for improvement.

but then from here we would like to improve upon the NIM.

Risks & concerns

  • Remaining ECL provisioning requirement

    high

    An additional INR6,000 crores in ECL provisioning is still required out of a total INR11,300 crores, which needs to be addressed by March 31, 2027, potentially impacting future profitability.

    Analyst acknowledged

  • Macroeconomic disruptions (oil prices, trade, logistics, currency, rates)

    medium

    Global disruptive situations like the Russia-Ukraine conflict impact oil prices, trade, logistics, currency, and interest rates, but India is well-poised due to proactive government and regulatory efforts.

    Management acknowledged

  • Stress in MSME sector

    medium

    The MSME sector is inherently susceptible to economic instability, but the bank is managing this through the ECLGS scheme and proactive engagement with customers to prevent stress from escalating.

    Analyst acknowledged

Q&A highlights

8 direct
Deposit growth and FCNR mobilization Direct
So already we are taking, we will be taking, but then we'll be taking where our -- the CASA and RTD to an extent that supports over and above we will be taking bulk deposit. And because the bulk deposit to the total deposit ratio was around 27%-odd which has come down to 19%-odd something. So it means around 7.5% to 7.9% we have reduced and that's the reason the efficiency is coming on. And we aspire to not aspire, but it is an achievable we will be in the position to garner 1.5 to 2 billion going forward till September.

Addresses the gap between deposit and loan growth, highlighting the bank's strategy to prioritize CASA/RTD and then bulk, and provides a specific FCNR target.

Asked by Mahrukh Adajania

Business growth, especially credit growth vs. deposit growth Direct
But then certainly going forward as we grow move from quarter-to-quarter till this year end you will see the same because we are in the industry from somewhere money will not come. Money will come in the market only and certainly we are there to cater it. And when we say and when you talked about credit growth and certainly the Q4 growth you have seen is one of the best. It was around 7%. So there is no doubt in the growth on the credit front. And certainly the first quarter remains a bit.

Analyst questioned the bank's growth compared to peers, and management explained their focus on efficiency first, then growth, and pipeline in corporate/RAM sectors.

Asked by Ashok Ajmera

Recovery from written-off accounts, NPA provisioning, and SMA 2 trends Direct
Regarding the recovery, if you are looking at it, March quarter and this quarter if you are looking at, in March quarter there was one bulk was there, I think everybody knows it, the Supreme Court order for one of the account where we got a good recovery. ... And secondly, the provision NPA provision has also gone up substantially, INR2,020 crores from INR420 crores in the March quarter. And similarly, if you see the SMA 2 numbers, overall SMA numbers have come down as you said and as we can see, but the SMA 2 has gone up by almost INR350 crores.

Analyst raised concerns about lower recovery this quarter and higher NPA provisions, and management clarified the impact of a one-off recovery in March and the strategic decision to clean the balance sheet.

Asked by Ashok Ajmera

ECL provisions requirement and annual run rate Direct
The second one, ECL is around INR6,000 crores total, the total requirement is around INR11,300 crore, but we are carrying INR5,500 crores of additional provision. INR6,000 crore is additionally required which I think which even if we take on one it will be decided in the board and other things, but then one quarter I think, but then there is a regulatory, forbearance for I think many quarters, so we can decide over there and go.

Clarifies the total ECL requirement, the amount already provisioned, and the remaining amount, which is a significant future provisioning need.

Asked by Dixit Doshi / Anand Dama

Asset quality outlook in MSME and Agri sector Direct
So, I think it is going to give a positive sort of, you know, because whatsoever we wanted to we have already done it, provided for. So, it will give a positive impact going forward when it is being reimbursed. So, on agriculture front here in this case we are not worried. ... MSME I briefed, I think a too lengthy discussion that we have carried out, 140 MSME customer meets pan India and it's a very big report, huge report, and actual report. So, it has really given a very good insight, and we are dealing with now, actually many banks you will see that generally like, you know, the Paracetamol given to every patient.

Addresses concerns about potential stress in these key sectors, with management expressing confidence due to proactive measures and government schemes like ECLGS.

Asked by Anand Dama

Yield on advances and NIM improvement drivers Direct
Yes, see, it is actually domestic our yield on advances is 8.01%. I think, and the global yield on advances is 7.90%. So, I think that is where you are coming from. So domestic actually, we are working in a fashion which we have told, that many of our portfolio which was lower yielding, we have converted to higher yielding. So that's the reason we are actually thinking to improve upon the domestic NIM.

Explains the strategy behind NIM improvement, focusing on shifting the portfolio towards higher-yielding assets.

Asked by Param Subramaniam

LCR improvement and impact of new guidelines Direct
Yes, if I remember correctly, there were three major things: one is through the internet, and means on the saving bank and all. I think you made it. So, there was some benefit of I think INR5,000 crores around some benefit I remember because last time there was a question on this which we answered. I think it was around 3%, and if I recall correctly then the amount turns which was around INR4000 crores – INR5000 crores. We will give you exact figure because there were three pillars which impacted. One pillar was negative, two pillars were positive and the net was positive to us. And there it also helped somewhere. Society, trust was one issue and another was decrease in run off factor.

Analyst sought quantification of LCR improvement drivers, and management indicated multiple factors including new guidelines and internal efforts.

Asked by Nitin Aggarwal

Credit-deposit ratio and comfortable operating range Direct
See, it was around March, 74 levels which is around 85-86 levels now. So, it is almost 10 to 11 basis point, percentage basis it has increased. So, it is a good comfortable range. We will not go much beyond that. And that is why we said we wanted to build efficiency. We have tried and I think we are successful in that.

Clarifies the bank's current credit-deposit ratio and management's view on its sustainability and optimal range.

Asked by Nitin Aggarwal

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Detailed narrative

Overall Performance & Strategic Pillars

Union Bank of India achieved its highest ever profit in Q1 FY27, demonstrating strong financial health. The bank's Return on Assets (ROA) remained robust at 1.36%, consistent over the last three quarters. Management attributed this success to its focus on five strategic pillars: Efficiency, Robustness, Quality and Sustainable Growth, Profitability, and Customer Centricity, with improvements aligning with these objectives since December 2025. The cost-to-income ratio saw a significant reduction of 500 basis points, reflecting enhanced operational efficiency.

Deposit Franchise & Cost of Funds

The bank reported an average CASA of over INR24,000 crores and average Retail Term Deposits (RTD) of INR17,000 crores for the quarter. Despite shedding INR18,000-20,000 crores of bulk deposits, the bank's strategy to prioritize CASA and RTD led to an 18 basis point reduction in the cost of deposits. Management aims to further reduce the bulk deposit to total deposit ratio to below 1.15% over the next 1-3 years, enhancing funding stability and pricing. The bank is also targeting FCNR mobilization of USD 1.5-2 billion by September.

Credit Growth & Sectoral Focus

Union Bank of India is targeting credit growth at industry levels plus 1%, with specific aims for 18-20% growth in the RAM (Retail, Agriculture, MSME) sectors. The bank has a sanctioned but undisbursed pipeline of over INR1,00,000 crores in the corporate sector. Proactive schemes like 'Agri Unnati' and cluster schemes for MSME are being implemented to drive growth. Management emphasized a cautious approach to gold loans, leading to a de-growth of INR2,500-3,000 crores in this portfolio to ensure compliance and quality.

Asset Quality & Provisioning

The bank's asset quality metrics, including GNPA and NNPA levels, are among the best in the industry. While overall SMA numbers have decreased, SMA 2 saw a slight increase of INR350 crores this quarter. Management clarified that a one-off bulk recovery in the March quarter impacted recovery figures this quarter. The bank has proactively set aside INR800 crores in additional provisions for ECL, with a total of INR11,300 crores required and INR6,000 crores remaining to be provisioned by March 2027.

Capital Adequacy & Liquidity

Union Bank of India maintains a robust capital base with a Capital Adequacy Ratio (CAR) of 18.46%, significantly higher than the 74% level in March 2025. The bank's Liquidity Coverage Ratio (LCR) stands at a comfortable 121 basis points, well above the RBI threshold of 100%. This strong liquidity position, with INR42,000 crores in excess liquidity, provides ample room for growth and resilience against external shocks.

MSME Sector Management

Management acknowledged the inherent stress in the MSME sector but highlighted proactive measures taken to mitigate risks. The bank conducted 140 regional customer meets and compiled data on challenges faced by MSMEs. Through initiatives like the ECLGS scheme, which has seen INR10,000 crores disbursed out of a sanctioned INR12,000 crores, and fast-track renewals, the bank is actively managing its MSME portfolio to prevent stress from creeping into its business.

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