Synopsis: Shares of City Union Bank increased after the company reported a 16 percent YoY and 6 percent QoQ increase in net profit for Q1FY26, along with stable operational metrics and better asset quality.
The shares of one of the oldest private sector banks in India are in focus today, after declaring financial results for Q1FY26, where net profits rose by 16 percent YoY and 6 percent QoQ, check it out.
With a market capitalization of Rs. 16,162 crore, the shares of City Union Bank were trading at Rs. 218.11, up by 2.75 percent from its previous day close of Rs. 214.28 per equity share.
Q1 Update
In June 2025, City Union Bank Ltd reported Q1FY26 results with a moderate year-over-year performance compared to Q1FY25. The generated net interest income of Rs. 625.3 crore, up by 15 percent as compared to Rs. 545.2 crore in Q1FY25, and up by 4.16 percent compared to Q4FY25 of Rs. 600.3, indicating a slight improvement in the operational efficiency yearly. Net Advances increased by 16 percent from Rs. 46,547.9 crore to Rs. 54,020.3 crore Year over Year.
Gross profit was Rs. 450.9 crore in Q1FY26, increased by 21 percent as compared to Rs. 373.5 crore in Q1FY25 and 2.25 percent compared to Rs. 441 in Q4FY25, Whereas net profit was Rs. 305.9 crore in Q1FY26, it increased by 16 percent as compared to Rs. 264.5 crore in Q1FY25 and increased by 6.22 percent QoQ from Rs. 288 crore in Q4FY25.
The amount of CASA deposits increased to Rs. 17,950.5 crore, which is 27.30 percent of the total deposits. The Return on Assets (ROA) increased to 1.55 percent from 1.51 percent a year ago, while the Cost-to-income ratio decreased to 48.12 percent from 49.34 percent.
The net interest margin (NIM) reduced to 3.54 percent in Q1FY26 from 3.60 percent in Q4FY25. The Gross NPA was 2.99 percent in Q1FY26 as compared to 3.88 percent in Q1FY25, and the Net NPA also stood at 1.20 percent from 1.87 percent year over year, indicating the company’s credit management system.
About the Company
Established in 1904, City Union Bank Ltd. is the oldest private sector bank in India, with its headquarters located in Kumbakonam, Tamil Nadu. With a granular asset profile that supports both short-term and long-term agricultural loans, its primary focus is lending to MSMEs, retail, and wholesale trade.
The bank’s operations are divided into several segments, such as Retail Banking, Corporate & Wholesale Banking, Treasury, and Other Banking Operations. The company employs 7,725 people, has 876 branches, 1,776 ATMs, and maintains an efficiency ratio of 48.12 percent as of June 30, 2025.
Analyst outlook
JM Financial maintained a “Buy” rating for City Union Bank with a revised target price of Rs. 250, with an upside of 14.62 percent from current market price of Rs. 218.11.
JM Financial maintains its optimism about the bank, pointing to its stable margins, scalable tech-led co-lending model, and strong capital position (CAR at 23.1 percent) as its main advantages.
Q1FY26 saw a 6 percent QoQ increase in net profit and a 4 percent growth in NII, despite a slight decline in NIMs to 3.5 percent. The brokerage maintained a “Buy” rating, valuing the stock at 1.6x FY27E BVPS, and increased FY26 earnings estimates by 5 percent, projecting an average ROA/ROE of 1.5 percent/13 percent over FY26–FY27E.
Written by Akshay Sanghavi
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