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City Union Bank reported another strong quarter, with PAT rising 25% YoY

ICICIdirect Research 29 Jul 2026 DISCLAIMER

News: City Union Bank reported another strong quarter, with PAT rising 25% YoY (6.4% QoQ) to ₹383 crore, supported by healthy business momentum and stable asset quality. Advances grew 25% YoY (1.5% QoQ) to ₹67,645 crore, led by sustained traction in MSME, gold loans and secured retail, while deposits increased 21% YoY (1.3% QoQ) to ₹79,342 crore, with average CASA growing 22% YoY. NII increased 31% YoY (4.4% QoQ) to ₹820 crore, aided by robust loan growth and stable lending yields, while NIM moderated 9 bps QoQ to 3.78% due to higher borrowing costs despite lower deposit costs. Other income remained largely flat YoY at ₹244 crore, impacted by lower fee income, though treasury gains improved. Operating expenses rose 16% YoY, while the cost-to-income ratio improved to 45.4%. Provisions increased 37% YoY, largely on account of higher tax and standard asset provisions, while asset quality continued to strengthen with GNPA/NNPA improving to 1.73%/0.61% and PCR rising to 85%. ROA remained healthy at 1.57%, while capital adequacy stayed comfortable at 21.7%.

View: Management remains confident of delivering credit growth 2–3% above the industry, supported by its secured MSME-led lending strategy and stable funding profile. The bank expects NIM to remain in the 3.65–3.70% range over the near term, while continued recoveries exceeding slippages, disciplined underwriting and improving operating efficiencies provide comfort on earnings visibility. Margin trajectory and fee income recovery remain key monitorables.

Impact: Positive

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