Union Bank of India reports 12% net profit growth in Q1 FY26, focuses on RAM segment and asset quality
The announcement provides detailed financial results for the quarter, including key performance indicators, asset quality, and profitability. It also includes management's insights into the operating environment, strategic priorities, and future outlook, which are crucial for investors to assess the bank's performance and prospects.
The bank reported an increase in net profit and improved asset quality metrics, which are positive indicators. However, credit growth was muted, Net Interest Margin (NIM) moderated, and PSLC income was significantly lower, leading to a mixed financial picture. Management commentary acknowledged challenges while outlining strategies to mitigate them.
Union Bank of India announced its unaudited financial results for the quarter ended June 30, 2025, and held a post-earnings call on July 19, 2025. * Net profit for Q1 FY26 grew by 12% to ₹4,116 crore. * Return on Assets (RoA) improved to 1.11% from 1.06% in the same quarter last year, and Return on Equity (RoE) stood over 15%. * Overall credit grew by 6.8%, with the RAM (Retail, Agriculture, MSME) segment registering a growth rate of 10.3%. Within RAM, Retail loan book grew at 26% and MSME at 18%. * Deposit growth was moderated due to a strategic call to reduce bulk deposits, which decreased by close to 7% from March to June 2025. Retail term deposits showed a good growth rate of around 12% Year-on-Year (YOY). CASA ratio remained stable at 32.5%. * Net Interest Margin (NIM) moderated to 2.76% for Q1 FY26, an 11 basis point decrease from Q4 FY25. The bank expects a 20-25 basis point impact on NIM for the full year FY26, with a potential bottom range of 2.60% to 2.65%. * Gross NPA ratio and Net NPA ratio saw marginal reductions, with provision cover ratio improving by 116 basis points to close to 95%. Credit cost was 47 basis points, and slippage ratio was less than 1%. * Gross recoveries outpaced total slippages in Q1 FY26, a trend the bank expects to continue. * Treasury profit for Q1 FY26 was ₹1,418 crore. Operating profit was slightly lower than Q1 FY25 primarily due to the absence of ₹950 crore PSLC (Priority Sector Lending Certificates) income recorded in the previous year. * The bank's management stated that the increase in SMA-2 accounts from ₹1,200 crore to ₹2,600 crore and overall SMA from ₹3,835 crore to ₹4,917 crore is being actively managed, with recoveries expected from some accounts in the September quarter. * The bank's PSLC income was impacted by an RBI guideline change regarding collateral for small and marginal farmer loans below ₹2 lakh. While the bank does not foresee the same level of PSLC income as last year, it expects to generate some profit from PSLCs going forward and aims to make up for non-interest income through other avenues. * The bank reduced its Savings Account rate by 25 basis points in July. It anticipates a further 25-35 basis points reduction in MCLR over the next six months, depending on market conditions. * The bank's gold loan book stood at ₹83,700 crore as of June 30, 2025, up from ₹78,000 crore a year ago. * The bank maintained its guidance for ROA to be above 1% for FY26.
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Union Bank of India filed this with the NSE as a statutory disclosure, categorised under results. It is a primary document, not a recommendation, and the desk marks it high impact, which is the band that most often changes something.
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