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Informist, Saturday, Apr. 25, 2026

By Suryash Kumar

MUMBAI – City Union Bank Ltd. is likely to report a healthy rise in net profit for the March quarter due to strong growth in net interest income and a decline in provisions, according to brokerages. Lower credit costs are also expected to support the net profit growth.

The bank's net profit is expected to rise 21% on year to INR 3.47 billion for the March quarter, according to the average of estimates from nine brokerages. The highest estimate for net profit is INR 3.59 billion by Prabhudas Lilladher Pvt. Ltd., while the lowest estimate is INR 3.36 billion by YES Securities (India) Ltd.

The bank's net interest income is expected to rise nearly 4% on quarter and 30% on year to INR 7.80 billion, according to the average of estimates. Growth in net interest income is likely to outpace the average growth on its advances for the March quarter, as yields in advances are likely to rise faster than deposit costs, according to YES Securities. The bank's advances are expected to rise to INR 626 billion for the March quarter, up over 20% on year, according to ICICI Securities, while Elara Capital estimates the advances to be at INR 634 billion, up nearly 22% on year.

The highest estimate for the bank's net interest income is INR 7.94 billion by Anand Rathi Share and Stock Brokers Ltd., while the lowest estimate is INR 7.56 billion by JM Financial Institutional Securities Pvt. Ltd. Prabhudas Lilladher expects the credit cost to decline 19 basis points on quarter to 0.45% for the reporting quarter.

However, net interest margin is expected to decline or remain flat in the quarter, with a sharper fall estimated in the first quarter of 2026-27 (Apr-Mar). "Persistent deposit constraints and liquidity headwinds will sustain elevated funding cost and NIM strain," Elara Securities (India) Pvt. Ltd. said.

ICICI Securities estimates net interest margin to remain flat sequentially at 3.89%, ­­while Prabhudas Lilladher expects it to fall 10 bps on quarter to 3.80%.  

Kotak Securities expects slippages to stay low for the bank and has a stable commentary on its asset quality. Slippages refer to loans that have turned non-performing assets for the bank in a given duration.

The bank's provisions are expected to fall over 24% sequentially to INR 725 million for the March quarter, according to Prabhudas Lilladher. The bank's gross non-performing assets were INR 13.20 billion as on Dec. 31, 2.17% of its total advances, while its gross non-performing assets were INR 16.38 billion as on Mar. 31, 3.09% of its total advances.

The bank will declare its Jan-Mar and FY26 earnings on Monday. On Friday, shares of the company closed at INR 262.51 on the National Stock Exchange, up over 1%. Shares of the company are down nearly 12% since the company reported its December quarter earnings on Feb. 2.

Of the 14 research reports on City Union Bank available with Informist, 12 have a "buy" recommendation on the stock and 2 have a "hold" call. The average target price of the "buy" recommendations is INR 315, which is nearly 20% higher than the current market price.

Following are the March quarter earnings estimates for City Union Bank from nine brokerages in descending order of the estimate of net profit in INR billion:

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Edited by Tanima Banerjee

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