Union Bank of India · Material risks, their source context, and severity in the latest available quarter.
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Risk intelligence
Management acknowledged monitoring West Asia war impact on energy-sensitive sectors (Morbi ceramics) and remittance flows. While no significant stress observed yet (only 59 CGSE applications, 35 PC extension requests), MSME slippages rose to INR 2,023 crore in Q4 vs INR 1,660 in Q3. Management is handholding affected MSMEs with extended bill periods.
Bulk deposit blended rate was ~6.90% in Q4 (March piece at ~7.70%), compressing margins on corporate advances yielding 7.20-7.50%. Although management shifted INR 57,000 crore from bulk to CASA/RTD, competitive deposit pricing could continue weighing on margins.
Total deposit growth of 2.72% YoY significantly trails 9.74% advance growth. While LCR (114%) and NSFR remain comfortable with 7-8% buffer above internal triggers, sustained credit growth requires matching liability generation. CD ratio rose to ~80.5% from 77% in March 2025.
Analyst Ajmera flagged that while SMA-2 numbers declined, SMA-1 accounts nearly doubled QoQ. Management interpreted this positively (movement from SMA-2 to SMA-1 indicating recovery), but the doubling of early-stage stress accounts warrants close monitoring in coming quarters.
