Earnings Outlook
Union Bank may see Apr-Jun PAT rise 17% despite NIM falling
This story was originally published at 21:51 IST on 17 July 2025
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By Kabir Sharma
MUMBAI – Despite a fall in margins, Union Bank of India is expected to report an increase of 17.3% in net profit for the June quarter on significant improvement in asset quality, according to brokerages tracking the state-owned lender. Stable cost ratios and some moderation in cost of funds are also likely to support the bank's bottom line, they said.
According to the average of estimates by six brokerages, Union Bank is expected to report a net profit of INR 43.17 billion, higher than INR 36.79 billion a year ago. Sequentially, the bank's net profit is expected to fall 13.4%. Shares of the bank have risen a whopping 26.6% since May 8, when it declared its Jan-Mar earnings. Thursday, the bank's shares closed 1.4% lower at INR 146.31 on the National Stock Exchange.
"NIM (net interest margin) is expected to decline sharply on quarter, led by lower yield on advances, while cost of funds might decline modestly," Kotak Institutional Equities said in a note. The bank had reported a net interest margin of 2.91% for the March quarter.
The broking firms were divided on the provision numbers for the bank. Prabhudas Lilladher Pvt. Ltd. and Motilal Oswal Financial Services Pvt. Ltd. expect a surge in provisions while Kotak Equities sees a sharp fall supporting the net profit. In the March quarter, the bank's provisioning had increased 22.6% on year to INR 15.44 billion. However, on a sequential basis, the provisions had fallen over 3%.
The broking firms have pegged the bank's net interest income at INR 92.96 billion, down 2.3% on quarter and 1.2% on year. The bank had reported a net interest income of INR 95.14 billion in the previous quarter.
Stable slippage and steady credit cost are expected to keep the bank's asset quality in check, the brokerages said. "We expect slippages to be broadly flat and credit cost to decline to <0.5% (less than 0.5%), as most of the journey toward net NPL (non-performing loans) reduction is complete," Kotak Equities said. The bank's asset quality had improved on a sequential basis, with the gross non-performing asset ratio at 3.60% as of Mar. 31, from 3.85% at the end of December. The net non-performing asset ratio as of Mar. 31 was 0.63%, down from 0.82% a quarter ago.
Discussions among analysts will stay around the recovery pipeline and drivers of net interest margin going forward, analysts said. Of the six brokerages tracking the lender, five have a "buy" rating with an average target price of INR 151. Only one has a "sell" rating with a target price of INR 120.
Union Bank of India is due to release its quarterly results Saturday. Following are the Apr-Jun earnings estimates for the bank in INR million, based on reports from six brokerage firms in descending order of net profit:
| Brokerage | Net interest income | Net profit |
| Anand Rathi Share and Stock Brokers Ltd. | 92,065.00 | 45,202.00 |
| Prabhudas Lilladher Pvt. Ltd. | 94,872.00 | 45,277.00 |
| Emkay Global Financial Services Ltd. | 93,870.00 | 45,044.00 |
| Kotak Institutional Equities | 91,774.00 | 41,910.00 |
| Motilal Oswal Financial Services Ltd. | 92,751.00 | 40,808.00 |
| Antique Stock Broking Ltd. | 92,406.00 | 40,758.00 |
| Average | 92,956.33 | 43,166.50 |
End
Edited by Rajeev Pai
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