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Informist, Friday, Jan. 30, 2026

 

By Suryash Kumar

 

MUMBAI - City Union Bank Ltd. is likely to post a double-digit on-year rise in net profit for the December quarter due to strong loan growth and contained credit cost, according to brokerages. Limited credit cost is likely to lead to an improved return on assets for the bank for the December quarter.

 

The bank is expected to post a net profit of INR 3.33 billion for the December quarter, according to the average of estimates from nine brokerages. This is about 17% higher from the year-ago quarter. The highest estimate for the bank's net profit is INR 3.45 billion by Sharekhan Ltd., while the lowest estimate of INR 2.81 billion is Prabhudas Lilladher Pvt. Ltd.

 

City Union Bank is seen to have a return on asset of "~1.6-1.7% over FY26-28E from 1.5% in FY25 and 1-1.3% over FY20-22," Emkay Global Financial Services Ltd. said.

 

The lender is also likely to post an on-quarter increase in net interest income for the December quarter due to healthy growth in advances. However, the bank's net interest income growth is estimated to be lower than average loan growth on quarter as a fall in yield on advances outpaced the decline in deposit cost, according to brokerages. City Union Bank will declare its December quarter earnings on Monday.

 

While the bank's December quarter net interest income is expected to grow 3.6-4.2% on quarter, its advances are estimated to rise 4.5% on quarter, according to brokerages. The industry average for loan growth is expected to be 12% on year for the December quarter, while City Union's advances are estimated to have grown around 18%, according to brokerages.

 

The bank is expected to post a net interest income of INR 6.98 billion for the December quarter, according to the average of estimates. This is over 4% higher on quarter and nearly 19% higher on year. The highest estimate for City Union's net interest income is of INR 7.12 billion by ICICI Securities, while the lowest estimate of INR 6.9 billion is by Sharekhan ltd.

 

City Union Bank's net interest income growth has been impacted by RBI's repo rate cuts, according to brokerage reports. The Reserve Bank of India's Monetary Policy Committee has cut the key repo rate by 125 bps in 2025.

 

The impact of rate cuts also reflects in the small growth in the net interest margin, which is likely to be only 1 basis point on a sequential basis, according to Emkay Global. Borkerages expect the net interest margin growth has bottomed out in the December quarter.

 

Fresh slippages should also remain low for the bank, with Kotak Securities expecting it to be INR 1.7 billion. Stress in personal loan and credit card segment is likely to ease while "most other portfolios are likely to report stable NPA levels. Improving collections in the microfinance segment should further aid moderation in NPAs, with MFI (micro finance institution) slippages expected to decline from recent peaks," Nirmal Bang said.

 

Slippage refers to loans that have turned non-performing assets for the bank in a given duration. The bank's gross non-performing assets were INR 13.93 billion on Sept. 30, 2.42% of its total advances.

 

Friday, shares of the company closed at INR 301.75 apiece on the National Stock Exchange, up over 3%. Shares of the company are up over 18% since the company reported its September quarter earnings.

 

Of the 13 research reports on City Union Bank available with Informist, 12 have a "buy" recommendation on the stock while one has a "hold" call. The average target price of the "buy" recommendations is INR 284, which is over 6% lower than the current market price.

 

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

 

Brokerage	Net Interest Income	Net Profit
Sharekhan Ltd	6.9	3.45
Kotak Securities Ltd	7.12	3.44
JM Financial Institutional Securities Pvt Ltd	7.03	3.43
Nirmal Bang Equities Pvt Ltd	6.9	3.42
ICICI Securities Ltd	7.12	3.42
Emkay Global Financial Services Ltd	6.95	3.42
Elara Securities (India) Pvt Ltd	6.93	3.38
YES Securities (India) Ltd	6.91	3.23
Prabhudas Lilladher Pvt Ltd	6.94	2.82
Average	6.98	3.33

 

End

 

Edited by Deepshikha Bhardwaj

 

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