City Union Bank Ltd. (CUB) reported a 15% year-on-year (YoY) increase in net profit for the second quarter of FY25, reaching Rs 329 crore, driven by healthy loan growth and improved asset quality. The bank’s net interest income (NII) rose modestly, supported by steady margins despite a competitive lending environment. Strong advances in the retail and MSME segments, along with effective cost management, contributed to the bottom-line expansion. With a cautious yet optimistic outlook, CUB continues to focus on maintaining asset quality and strengthening its digital banking initiatives to sustain growth momentum in the coming quarters.
Steady Financial Performance in Q2
City Union Bank’s second-quarter results reflected consistent financial discipline and balanced portfolio management. The bank’s net profit rose to Rs 329 crore, compared to Rs 287 crore in the same quarter last year, marking a 15% YoY growth. The performance was underpinned by solid loan book expansion and resilient operational efficiency.
The net interest income (NII) stood at Rs 605 crore, registering a slight improvement from Rs 590 crore in the previous year, supported by stable net interest margins (NIMs), which remained around 3.9%. This stability highlights the bank’s ability to maintain profitability even amid tightening monetary conditions and elevated funding costs.
Advances and Deposits Reflect Steady Expansion
During the quarter, the bank’s total advances grew by nearly 12% YoY, led by strong demand from the MSME, retail, and agriculture sectors—core pillars of the bank’s lending strategy. The deposit base also expanded, reaching approximately Rs 55,000 crore, with CASA deposits accounting for a substantial share, helping the bank manage its cost of funds efficiently.
City Union Bank’s credit-deposit ratio remained stable, indicating prudent lending practices and sufficient liquidity. The management emphasized that the bank continues to prioritize sustainable growth over aggressive expansion, ensuring a healthy balance between profitability and risk exposure.
Asset Quality and Provisions Improve
One of the key highlights of the quarter was the improvement in asset quality. The gross non-performing assets (GNPA) ratio fell to 4.4%, compared to 4.7% a year ago, while the net NPA declined to 2.2%. This progress reflects the bank’s strengthened credit monitoring framework and effective recovery efforts.
Provisions and contingencies were maintained at prudent levels to safeguard against potential credit risks. The provision coverage ratio (PCR) stood strong at around 70%, underscoring the bank’s conservative approach to asset management.
Operating Metrics and Efficiency
City Union Bank continued to demonstrate operational resilience, maintaining cost discipline despite inflationary pressures. The cost-to-income ratio remained below 45%, supported by effective digitization efforts and branch-level productivity enhancements.
Non-interest income—comprising fees, commissions, and treasury gains—contributed positively to overall earnings, helping offset the moderation in NII growth. The bank’s strategic focus on cross-selling and expanding digital channels has begun yielding tangible results, with digital transactions showing double-digit growth.
Digital Transformation and Future Strategy
CUB is investing heavily in digital infrastructure and customer engagement tools to enhance its competitiveness in the rapidly evolving banking landscape. Its mobile and internet banking platforms have seen robust adoption, particularly among small business clients and retail users.
The bank’s management reiterated its commitment to leveraging technology to streamline credit processes, improve risk assessment, and expand its reach in semi-urban and rural markets—segments that continue to drive its growth.
Looking ahead, the bank remains focused on credit quality, capital adequacy, and regulatory compliance, positioning itself to capture new lending opportunities as the Indian economy maintains its growth trajectory.
Outlook: Stable Growth Amid Sectoral Challenges
City Union Bank’s Q2 results reaffirm its status as one of the most consistently performing mid-sized private sector banks in India. While the sector faces challenges such as rising competition, fluctuating interest rates, and evolving regulatory norms, CUB’s disciplined approach and regional expertise provide a competitive edge.
The bank expects moderate credit growth in the second half of FY25, supported by sustained momentum in MSME and retail lending. Continued investments in technology, asset quality improvement, and customer-centric services are expected to drive long-term profitability and shareholder value.
Conclusion:
City Union Bank’s Q2 performance highlights its strong fundamentals and prudent growth strategy amid a complex economic environment. With a 15% increase in profit and improved asset quality, the bank is well-positioned to sustain steady growth while balancing innovation, risk management, and operational efficiency—a reflection of the institution’s resilience and strategic foresight.
Comments