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    Union Bank of India

    UNIONBANK
    Financial Services·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

    6

    • 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

    3

    • 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

    Single quarter

    06 metrics
    1. 01ROA1.4%
    2. 02NIM2.8%
    3. 03Capital Adequacy Ratio18.5%
    4. 04CASA (average)₹24,000 Cr
    5. 05Credit Growth13%

    Capital allocation

    1
    high confidence
    CategoryHeadline
    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).

    Guidance & targets

    8
    CategoryTargetPriority
    Credit
    Credit Growth
    industry level growth plus 1%
    		Medium
    Credit
    Credit Growth in RAM sectors
    18% to 20%
    		Medium
    Deposit
    Deposit Growth
    similar range minus 2% somewhere
    		Medium
    Deposit
    FCNR Mobilization
    1.5 to 2 billion
    		High
    Deposit
    Bulk Deposit to Total Deposit Ratio
    below 1.15 percentage points
    		Medium
    Profitability
    PSLC Income
    INR800 crores - INR900 crores
    		Medium
    Profitability
    NIM
    improve upon the NIM
    		Medium
    Provisioning
    ECL Provisioning (remaining)
    INR6,000 crores
    		High

    What to watch in Q2 FY27

    5

    NIM Improvement

    Next quarter / going forward
    Current2.80%
    TargetImproved 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

    3
    RiskSeverity

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

    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

    medium

    Stress in MSME sector

    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

    medium

    Remaining ECL provisioning requirement

    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

    high

    Q&A highlights

    8

    “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

    2 min read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.