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Informist, Tuesday, Oct. 28, 2025

By Krity Ambey

MUMBAI – Even as City Union Bank's interest income growth shows moderation, its steady asset quality is expected to help the lender log a net profit, albeit modest, in the September quarter. As seen in the last two years, the bank's quarterly provisions are likely to be lower than INR 1 billion in the reporting quarter as well, according to analysts' projections.

City Union Bank's net profit is expected to rise 3% on year to INR 2.95 billion for the September quarter, based on the average of estimates from eight brokerages. The brokerage firms' profit estimates for the bank range from INR 2.71 billion to INR 3.08 billion.

Analysts expect the bank's asset quality to remain stable in the September quarter, but provisions may be slightly higher sequentially. City Union Bank's gross non-performing asset ratio may improve by 35 basis points, but provisions may rise 10% on quarter, according to Prabhudas Lilladher Pvt. Ltd. That would bring the lender's gross NPA ratio to 2.64% and provisions to INR 770 million, up 10% on year.

However, analysts caution about a rise in the lender's Special Mention Accounts as City Union Bank has higher exposure to Micro, Small and Medium Enterprises, especially those that export to the US, Emkay Global Financial Services Ltd. said. India's exports to the US fell 12% on year in September after the US imposed a 50% tariff on Indian goods in August.

The bank's net interest income is likely to rise nearly 9% on year to INR 6.32 billion, as per an average of the eight estimates, with projections ranging from INR 6.18 billion to INR 6.49 billion. Sequentially, the bank's net interest income is likely to remain flat.

Analysts expect the lender's net interest margin to either improve slightly or remain the same in the quarter. The bank's NIM may improve 2 bps on quarter to 3.5%, brokerage firm Prabhudas Lilladher said, citing improvement in cost of funds.

Brokerages see the bank posting healthy loan growth in the September quarter, with Kotak Securities projecting a credit growth of 14% on year. Sequentially, however, the credit growth may decline 3%, YES Securities said.

Analysts suggest asset quality, provisions, NIM trajectory, and loan growth are metrics to track in the bank's financial results for the September quarter, which will be announced Monday.

Since the bank's financial results for the trailing quarter, its share price has climbed nearly 12%. On Tuesday, the shares of the lender ended more than 3% higher at INR 239.27 on the National Stock Exchange. Of the 17 research reports on the stock available with Informist, 16 have a 'buy' rating on City Union Bank with an average target price of INR 227, and only one has a 'hold' rating with INR 210 target price. 

The following are the Jul-Sept earnings estimates in INR million for City Union Bank based on reports from eight brokerage firms in descending order of the estimates of net profit: 

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Edited by Ashish Shirke

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