Earnings Outlook
City Union Bk may see modest PAT rise as provisions double
This story was originally published at 15:46 IST on 30 July 2025
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By Krity Ambey
NEW DELHI – Despite support from growth in the net interest income, City Union Bank may post only a modest profit growth for the June quarter, as its provisions are likely to nearly double from the low base of the year-ago quarter. The bank has reported quarterly provisions of lower than INR 1 billion in each of the last seven quarters.
City Union Bank's net profit is expected to grow 9.2% on year to INR 2.89 billion for the June quarter, according to the average of estimates given by 11 brokerage firms. The brokerage firms' profit estimates for the bank range from INR 2.54 billion to INR 3.03 billion.
Sequentially, the bank's profit will be almost flat if the final print is in line with the estimate. The lender had reported a net profit of INR 2.88 billion in the March quarter, driven by its net interest income and other income. Its provisions had more than doubled to INR 780 million in the trailing quarter as well from a low base of INR 320 million.
In the June quarter, analysts anticipate a slight improvement in the bank's asset quality and a sequential fall in provisions. According to Prabhudas Lilladher Pvt. Ltd., City Union Bank's provisions may fall 0.7% on quarter. That would bring provisions to INR 774.54 million, up 99% on year. After an uptick in the March quarter, slippages should normalise in the June quarter, Emkay Global Financial Services Ltd. said in a pre-earnings report.
The bank's net interest income is likely to increase 10.6% to INR 6.03 billion, as per an average of the 11 estimates. The estimates range from INR 5.84 billion to INR 6.13 billion. Sequentially, the bank's net interest income is likely to show a negligible growth.
Most brokerages expect the lender's net interest margin to contract in the latest quarter, primarily due to the Reserve Bank of India's Monetary Policy Committee cutting the policy repo rate by 100 basis points in 2025. Both ICICI Securities Ltd. and Kotak Institutional Equities see a margin compression of 10 basis points on quarter, which could bring down the bank's NIM to 3.50% in the June quarter.
Brokerages see the bank posting healthy loan growth. IDBI Capital Market Services Ltd. and Kotak Institutional Equities have projected credit growth of over 14% for the lender in the June quarter. The two have also pegged deposit growth at 13.5% and 15%, respectively.
Analysts suggest asset quality, provisions, NIM trajectory, and loan growth as metrics to track in the bank's financial results for the June quarter, which are expected to be announced Thursday.
Since the bank's financial results for the trailing quarter, its share price has climbed nearly 20%. On Wednesday, the shares of the lender had ended 1.55% higher at INR 207.50 apiece on the National Stock Exchange. Of the 16 research reports on the stock available with Informist, 15 have a 'buy' rating on City Union Bank, with an average target price of INR 213.
The following are the Apr-Jun earnings estimates in INR million for City Union Bank based on reports from 11 brokerage firms in descending order of the estimates of net profit:
Brokerage | Net interest income | Net profit |
Nirmal Bang Equities Pvt Ltd | 5,970.00 | 3,032.00 |
Antique Stock Broking Ltd | 6,114.00 | 3,023.00 |
YES Securities (India) Ltd | 6,093.00 | 3,016.00 |
JM Financial Institutional Securities Pvt Ltd | 6,046.00 | 2,987.00 |
Dolat Capital Market Pvt Ltd | 5,843.00 | 2,940.00 |
ICICI Securities Ltd | 6,117.00 | 2,928.00 |
Emkay Global Financial Services Ltd | 6,082.00 | 2,877.00 |
IDBI Capital Market Services Ltd | 5,939.00 | 2,863.00 |
Anand Rathi Share and Stock Brokers Ltd | 5,992.00 | 2,813.00 |
Prabhudas Lilladher Pvt Ltd | 6,125.00 | 2,735.00 |
Kotak Institutional Equities | 5,994.00 | 2,542.00 |
AVERAGE | 6,028.64 | 2,886.91 |
End
Edited by Akul Nishant Akhoury
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