Detailed Narrative
New Leadership and Growth Vision
MD Asheesh Pandey returned to Union Bank with clear growth ambitions, targeting system-level performance. The bank has conducted comprehensive strategy reviews including field conferences and developed detailed geography-level implementation plans. Leadership emphasized moving from current 55% RAM segment share to 58% while maintaining focus on profitable growth.
Strategic Portfolio Optimization
Bank executed strategic shift by reducing high-cost bulk deposits by 21.85% Y-o-Y while growing retail term deposits plus CASA by INR 1,03,000 crores Y-o-Y. This optimization aims to protect margins while building sustainable deposit franchise. The strategy shows timing lag but expected to yield results from Q3 onwards.
Asset Quality Excellence
Remarkable improvement in asset quality with gross NPA declining 107 bps Y-o-Y to 3.29%, credit cost falling to 22 bps from 109 bps, and slippage ratio contained at 0.91% vs 2.40% last year. H1 FY'26 gross recovery exceeded slippages by INR 1,800 crores, demonstrating strong collection efficiency.
NIM Recovery Strategy
NIM at 2.67% with management guidance that bottom has been reached. Expected stabilization from Q3 onwards with improvement thereafter, supported by deposit repricing and CRR cut benefits. The sequential decline is moderating, supporting recovery expectations.
Prudent Provisioning Approach
Bank took INR 880 crores standard asset provisioning for ECL preparation and prudential coverage on specific accounts. This conservative approach positions bank well for regulatory transitions while maintaining strong PCR of 95.13%.