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City Union Bank Ltd — Q4 FY26
City Union Bank delivered a strong Q4 FY26 with advances growing 26% YoY to ₹66,698 crore, the highest in 13 years, driven by MSME, gold loans, and secured retail.
bullish
high
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City Union Bank delivered a strong Q4 FY26 with advances growing 26% YoY to ₹66,698 crore, the highest in 13 years, driven by MSME, gold loans, and secured retail. Deposits grew 23% YoY to ₹78,338 crore, maintaining a CD ratio of 85%. Asset quality improved sharply: gross NPA fell below 2% for the first time in 11 years to 1.91%, and SMA (0+1+2) declined to 2.47% from 3.68% in Q3. PAT for FY26 rose 18% YoY to ₹326 crore, with ROA at 1.56%. The outgoing MD highlighted disciplined underwriting and avoidance of risky sectors. New CEO guided for advances growth 2-3% above industry, stable NIM around 3.87%, and ROA improvement to 1.65-1.66% in FY27. Elevated opex from 70 new branches may pressure near-term margins. Key risk: US-Iran conflict impact on inflation and asset quality, though management sees no signs yet.
Promises1 met · 0 missedRisks3 trackedTranscriptfull text
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US-Iran conflict impact on asset quality
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Advances Growth
26%
+26% YoY
Highest credit growth in 13 years; advances reached ₹66,698 crore.
Gross NPA
1.91%
-26bps QoQ
Below 2% for first time in 11 years; improved from 2.17% in Q3.
SMA (0+1+2)
2.47%
-121bps QoQ
Sharp sequential improvement from 3.68% in Q3; best in 22 years.
Gold Loan Share
30-32%
Flat YoY
Near upper band; management maintains discipline on per-gram lending.
What Changed vs Last Quarter
NEW
Advances growth 2-3% above industry in FY27
Management targets credit growth 2-3% higher than system growth, with MSME at 55-60%, gold loans 30-35%, and secured retail the rest.
NEW
CD ratio maintained at 85-87%
The bank aims to keep credit-deposit ratio in the 85-87% range, supported by granular deposit growth.
NEW
ROA improvement to 1.65-1.66% in FY27
New CEO guided for ROA to exit FY27 at 1.65-1.66%, up from 1.56% in FY26, driven by fee income and cost control.
NEW
Operating expenses to rise 15-18% in FY27
Elevated opex due to opening 70 branches in April alone; full-year branch addition target of 75.
DROPPED
Mid-to-high teen credit growth for FY27
Management expects loan growth of mid-to-high teens, 2-3% above industry, continuing the current trajectory.
DROPPED
NIM stable around 3.9% with ±10bps band for Q4
NIM expected to remain in the range of 3.8% to 4.0% in Q4 FY26, with possible upward bias from deposit repricing.
DROPPED
ROA to remain above 1.5%
Return on assets expected to stay at current levels of 1.5%+ for FY26.
DROPPED
Cost-to-income ratio in 48-50% range for FY26
Management reiterated cost-to-income ratio guidance of 48-50% for the full year.
NEW RISK
US-Iran conflict impact on asset quality
Management acknowledged potential risks from geopolitical tensions and oil price inflation, but stated no impact seen yet. They are closely monitoring SMA trends.
NEW RISK
Gold price correction risk
Analyst raised concern about gold loan portfolio if prices fall 10-15%. Management responded that per-gram lending was capped at ₹10,300, providing sufficient cushion.
NEW RISK
Elevated operating expenses from branch expansion
Opening 70 branches in one month will increase opex by 15-18% in FY27, potentially pressuring near-term margins until new branches break even.
RISK GONE
Rate cut transmission pressure on yields
The December 25bps repo cut has been fully transmitted to EBLR-linked loans, impacting yields by ~₹11 crore per quarter.
RISK GONE
Elevated write-offs may signal underlying stress
Technical write-offs remain high (₹1,000+ crore), though management cites tax and NPA management benefits.
RISK GONE
ECL provision uncertainty
Management declined to provide specific ECL provision numbers, citing industry-wide non-disclosure, creating uncertainty.
Fast read
Guidance and risk preview
Management targets credit growth 2-3% higher than system growth, with MSME at 55-60%, gold loans 30-35%, and secured retail the rest.
Management acknowledged potential risks from geopolitical tensions and oil price inflation, but stated no impact seen yet.
View Risks →