Synopsis:
City Union Bank reported steady Q2FY26 growth with higher interest income, improved asset quality, and rising deposits, reflecting strong MSME-focused lending and efficient credit management.
The shares of one of the leading scheduled commercial banks in the private sector, engaged in lending to MSME and Retail or Wholesale Trade, caught the investors’ attention following the release of its Q2FY26 results and updates.
With a market capitalization of Rs.18,644.79 crores, the shares of City Union Bank Limited were trading at Rs.251.60, up by 6.66 percent from its previous day closing price of Rs.235.90.
Q2FY26 Results
City Union Bank Limited reported net interest income of Rs.666.5 crore in Q2FY26, up by 14.42 percent from Rs.582.5 crore in Q2FY25 and 6.58 percent higher than Rs.625.3 crore in Q1FY26. Net profit grew to Rs.328.58 crores in Q2FY26, up by 15.22 percent from Rs.285.17 crores in Q2FY25 and 7.41 percent higher than Rs.305.91 crores in Q1FY26.
Deposits rose from Rs.63,526 crore in March 2025 to Rs.69,486 crore by September 2025. Advances rose from Rs.53,066.4 crore to Rs.57,561.2 crore over the same period. Total Business rose from Rs.1,16,592.4 crore in March 2025 to Rs.1,27,047.2 crore in September 2025. CASA balances also rose from Rs.18,118.9 crore to Rs.19,536.9 crore.
Gross non-performing assets declined steadily from 3.09 percent in March 2024 to 2.42 percent in September 2025. Similarly, Net non-performing assets declined from 1.25 percent to 0.90 percent. This drop in both GNPA and NNPA indicates the bank has successfully managed credit risk and reduced bad loans, signaling a stronger financial position.
As of September 30, 2025, City Union Bank’s total loan book stands at Rs.57,561 crore. The portfolio is mainly concentrated in Cash Credit & Demand Loans consisting of 64 percent and Term Loans of 35 percent, while Bills Purchased & Discounted form a small portion of 1 percent. Loans to Trading and MSME businesses make up around 42 percent, and the bank’s diversified loan types, smaller individual loan sizes, and collateral-backed lending help keep credit risk low.
Macquarie Target
Macquarie has given outperform rating with a target price of Rs.245 with the upside potential of 4.48 percent from the previous close of Rs.235. Indicating that bank is maintaining a balance between growth and profitability. Profit after tax was higher than expected, supported by better margins and lower credit costs. The management plans to sustain growth with a net interest margin of around 3.5 percent in FY26, while keeping return on assets steady.
City Union Bank Limited is a leading private sector bank with a strong presence across urban, semi-urban, and rural areas in South India. It operates through four main segments: Treasury, Retail Banking, Corporate Banking, and Other Banking Operations. It mainly focuses on lending to MSMEs, retail and wholesale trade, and provides both short- and long-term loans to the agricultural sector.
Written By: Jhanavi Sivakumar
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
