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    Union Bank of India

    UNIONBANK
    Financial Services·29 Apr 2026
    Management Summary

    Union Bank reported a strong Q4 FY26, driven by robust credit growth, significant improvement in asset quality, and enhanced capital ratios. The bank's net profit for the fiscal year reached ₹18,697 crores. Despite a slight compression in NIM due to rate cuts, management emphasized a strategic shift towards higher-yielding assets and a stronger CASA base. Concerns included the pace of deposit growth relative to advances and an increase in fresh slippages, though management expressed confidence in managing these.

    Highlights

    6

    • Net Profit for FY26 stood at ₹18,697 crores, with the bank reporting over ₹5,300 crores in Q4 profit.

    • Gross Advances grew robustly by 9.74% YoY, contributing to a total business growth of 5.78% YoY to ₹23.85 lakh crores.

    • Asset quality significantly improved, with Gross NPA reducing by 78 bps YoY to 2.82% and Net NPA reducing by 15 bps YoY to 0.48%.

    • Capital ratios strengthened, with CRAR at 18.10% and CET1 at 15.69% (up from 14.98%).

    • CASA ratio increased by 2.7 percentage points from September to 35.21%, indicating a stronger deposit franchise.

    • The bank shed ₹60,000-65,000 crores of low-yielding advances (IBPC and others) to improve profitability and NIM.

    Concerns

    3

    • Total deposit growth was 2.72% YoY, which was lower than gross advances growth, though adjusted for treasury book shifts and other factors, it was around 9%.

    • Net Interest Margin (NIM) saw a 21 bps reduction YoY to 2.70% and a 12 bps QoQ reduction to 2.64%, primarily due to December rate cuts.

    • Fresh slippages increased to ₹2,023 crores this quarter compared to ₹1,660 crores in the last quarter, and SMA-1 numbers doubled.

    What Changed2

    vs Q1 FY27

    Guidance items8 → 4 (-4)Risks discussed3 → 4 (+1)
    Key financials

    Metrics

    19

    Periods

    4

    Headline

    11
    • Gross Advances Growth
      9.7%
    • Total Deposit Growth
      2.7%
    • Gross NPA
      2.8%
    • Net NPA
      48%
    • CRAR
      18.1%

    Q4

    4
    • Employee Cost Reduction
      ₹586 Cr
    • Operating Expenses Increase
      ₹522 Cr
    • Recovery from Written-off Accounts
      ₹1,567 Cr
    • Fresh Slippages
      ₹2,023 Cr

    Q4 FY26

    2
    • RoA
      1.4%
    • NIM
      2.6%

    FY26

    2
    • Net Profit
      ₹18,697 Cr
    • Interest Income
      ₹1.06L Cr

    Segment breakdown

    RAM Segment
    12.6% Growth YoY
    Retail Advances
    16.8% Growth YoY
    MSME Advances
    18.8% Growth YoY
    Domestic RAM Advances
    57.5% Share of Total
    List

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Dividend

    ₹5/share (final)

    Payout ratio 20.6%

    Liquidity

    Liquidity disclosed

    The bank maintains a comfortable LCR of 114% (down from 123%) and a CD ratio above 80%. The RBI NOP circular had zero impact on the bank's interest or other income, with exposure limited to 30 million, well below the 100 million limit.

    Guidance & targets

    4
    CategoryTargetPriority
    Credit Growth
    Overall Credit Growth
    13%-14%
    		High
    NIM
    NIM
    2.64% or better
    		High
    Credit Cost
    Credit Cost
    Around 1%
    		Medium
    NII Growth
    NII Growth
    Similar to loan book growth
    		High

    What to watch in Q1 FY27

    5

    Credit Growth

    FY27
    Current9.74% YoY
    Target13%-14%

    Why it matters

    To assess if the bank can achieve its ambitious credit growth target while maintaining asset quality.

    Can we expect it 13%-14% growth in the credit sir in FY27? Yes, certainly, I think we are on that line. Yes.

    Risks & concerns

    4
    RiskSeverity

    Macroeconomic environment influenced by global conflicts and war-related disruptions

    Ongoing global conflicts and war-related disruptions have influenced the macroeconomic environment, with some impact on energy-sensitive sectors like Morbi. — Management acknowledged

    medium

    Potential NIM compression due to rate cuts

    The December rate cut led to a 12 bps QoQ NIM reduction, though management aims to defend and improve NIM going forward. — Management acknowledged

    medium

    Increase in fresh slippages and SMA-1 numbers

    Fresh slippages increased to ₹2,023 crores this quarter, and SMA-1 numbers doubled, though management noted positive movement from SMA-2 to SMA-1 due to recoveries. — Analyst acknowledged

    medium

    Slower deposit growth compared to advances

    Total deposit growth was 2.72% YoY, lower than gross advances growth, requiring strategic shifts in funding mix and resource mobilization. — Analyst acknowledged

    medium

    Q&A highlights

    7

    “So I believe there it gives a INR 1.29 lakh crores, which is almost above 9%. ... So I think we could make it the headway in the last six months.”

    Analyst questioned the sustainability of credit growth given lower reported deposit growth, prompting management to explain adjustments for treasury shifts and other resources.

    asked by CA Dr. Ashok Ajmera

    2 min read5 chapters

    Detailed Narrative

    01

    Robust Business Growth and Strategic Shifts

    Union Bank reported a total business of ₹23.85 lakh crores, growing 5.78% YoY. Gross advances increased by 9.74% YoY, with the RAM segment (Retail, Agriculture, MSME) leading the charge at 12.56% YoY growth. Retail advances grew 16.75% and MSME advances by 18.75%. The bank strategically shed ₹60,000-65,000 crores of low-yielding advances, including ₹35,000 crores of IBPC, to improve profitability and asset quality.

    02

    Significant Improvement in Asset Quality

    The bank demonstrated strong asset quality improvement, with Gross NPA reducing by 78 bps YoY to 2.82% and Net NPA reducing by 15 bps YoY to 0.48%. Recoveries from written-off accounts were substantial, reaching ₹1,567 crores in Q4 FY26, significantly higher than ₹667 crores in the previous quarter, partly due to the settlement of the Sterling Biotech group account (₹658 crores). Fresh slippages, however, increased to ₹2,023 crores in Q4.

    03

    Strengthening Deposit Franchise and Capital Base

    Despite a reported total deposit growth of 2.72% YoY, the bank's CASA ratio improved by 2.7 percentage points from September to 35.21%, and retail term deposits garnered ₹1,10,000 crores. The Capital Adequacy Ratio (CRAR) stood at a healthy 18.10%, with the CET1 ratio improving to 15.69% from 14.98%. The bank also made an additional general provision of ₹700 crores as a cushion, which does not impact net profit or capital.

    04

    NIM Management and Cost Efficiency

    Net Interest Margin (NIM) saw a 21 bps YoY reduction to 2.70% and a 12 bps QoQ reduction to 2.64%, primarily attributed to the December rate cuts. Management indicated a focus on defending and improving NIM in subsequent quarters. The bank also reported a reduction in employee costs by approximately ₹586 crores in Q4, while operating expenses increased by ₹522 crores, with the employee cost reduction linked to discounting rate factors.

    05

    Monitoring Macroeconomic Risks and Regulatory Compliance

    The bank is actively monitoring the impact of global conflicts and war-related disruptions, noting some stress in energy-sensitive sectors. However, no significant unusual impact has been observed on the overall book. The bank's LCR stands at a comfortable 114%, and it reported zero impact from the RBI NOP circular. The total outstanding buffer for standard asset provisions is ₹2,000 crores, and MSME risk filters remain unchanged.

    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.