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Informist, Thursday, Apr. 23, 2026

 

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--Union Bank MD: Have shed INR 730 bln of bulk deposits to cut costs
--CONTEXT: Union Bk of India mgmt speaking at post earnings press conference 
--Union Bank MD: Reduced treasury holdings by INR 250 bln to fund advances
--Union Bank MD: Made contingency provision of INR 7 billion in Jan-Mar
--Union Bank MD: No impact on treasury income from RBI cap on short dlr book
--Union Bank MD: Strive to outpace peers on business growth in FY27
--Union Bank MD: Seeing decline in inward remittances
--Union Bank MD: Aim advances growth of 13-14% in FY27
--Union Bank MD: Aim deposit growth of 8-9% in FY27
--Union Bank MD: Hold 4-5% of deposits as excess SLR bonds
--Union Bank MD: Will open 200 new branches in FY27
--Union Bk MD: Plan to grow co-lending book by INR 70 bln-INR 80 bln in FY27
--Union Bank MD: Have corporate loan pipeline of INR 550 bln
--Union Bank MD: NIM is likely to have bottomed out in Jan-Mar

 

MUMBAI – Union Bank of India is targeting advances growth of 13–14% and deposit growth of 8–9% in the financial year 2026-27 (Apr-Mar), with the management indicating it aims to outpace industry growth while navigating margin pressures and global uncertainties. Speaking at a post-earnings press conference, Managing Director Asheesh Pandey said Union Bank expects business momentum to improve after a muted first half in FY26, adding that net interest margins are likely to have bottomed out in the March quarter.

 

"We believe NIM has seen the bottom in the fourth quarter, and from here, we should see a more stable trajectory," the managing director said, pointing to the repricing of deposits and balance-sheet adjustments.

 

The bank's credit growth is expected to be supported by a corporate pipeline of about INR 550 billion, even as it continues to diversify lending across the retail, micro, small, and medium enterprises, and agriculture segments, Pandey said.

 

Union Bank plans to expand its co-lending portfolio by INR 70 billion–INR 80 billion in FY27 while strengthening its physical footprint with the addition of 200 branches during the year, Pandey said. The management said the lender will continue to maintain excess statutory liquidity ratio holdings of around 4–5% of deposits, ensuring liquidity buffers amid uncertain market conditions.

 

The bank is also repositioning its liabilities franchise. It has shed INR 730 billion of high-cost bulk deposits to reduce funding costs and is focusing on growing current account and savings account deposits and retail term deposits. In addition, the bank reduced its treasury holdings by INR 250 billion, redeploying those funds towards advances to support credit growth.

 

The bank's margins remained under pressure during FY26 from increased deposit costs and transmission of policy rate cuts, Pandey said. Interest income was impacted as a large portion of the loan book is linked to external benchmarks, leading to faster re-pricing of assets compared to liabilities. However, the managing director noted that the impact of rate cuts had largely played out. "Whatever transmission had to happen has already been absorbed. Going forward, the situation should be more stable," he said.

 

On treasury operations, the bank clarified that there was no impact from the central bank's cap on short dollar positions, as its exposure to the segment remains within the limits set by the Reserve Bank of India. Treasury income, however, declined on a strategic reduction in the investment book and lower one-off gains compared to the previous year.

 

Union Bank reported improving asset quality metrics, supported by recoveries and controlled slippages. It made a contingency provision of INR 7 billion in the March quarter as a precautionary buffer. Pandey described the provision as proactive, aimed at strengthening the balance sheet amid evolving regulatory norms and macroeconomic risks.

 

Addressing concerns around global disruptions, particularly the West Asia conflict, the managing director said the bank has not seen any significant stress in its micro, small, and medium enterprises portfolio so far. However, it is closely monitoring sectors exposed to energy costs and trade disruptions. "We are cautious in our approach, especially where there is export-import linkage, but as of now, there is no major stress visible," he said.

 

The bank did note a decline in inward remittances, attributing it to global trade disruptions and delays in supply chains.

 

Union Bank expects deposit growth of 8–9% in FY27, driven by a shift towards low-cost current account savings account and retail deposits. The management emphasised that shedding high-cost bulk deposits was a deliberate strategy to improve margins over the medium term.

 

"We are focusing on building a stronger CASA base and replacing bulk deposits with more stable, lower-cost funding," Pandey said. "We will strive to grow faster than the industry while maintaining asset quality and profitability."

 

The bank's bottom line for the reporting quarter rose nearly 7% on year and nearly 6% on quarter to INR 53.16 billion. The state-owned bank's net profit beat analysts' expectations. Brokerages had expected the bank's net profit to fall nearly 10% on year to INR 44.96 billion. However, the bank's shares ended 7.4% lower at INR 179.71 on the National Stock Exchange.  End

 

Reported by Kabir Sharma and Suryash Kumar

Edited by Rajeev Pai

 

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