Union Bank of India: Tier II Bonds Rating Reaffirmed at AAA; AT1 Bonds Withdrawn
Union Bank of India's Tier II Bonds rating reaffirmed at AAA/Stable by Brickwork Ratings on September 17, 2026. Additional Tier 1 Bonds totaling ₹1705 Crore were withdrawn due to full redemption. The bank's strong operational profile, improving asset quality, and robust capitalization support the reaffirmation.
Credit rating actions on debt instruments are important for the bank's borrowing costs and investor confidence, impacting its ability to raise further debt.
The reaffirmation of a strong credit rating for Tier II bonds and the withdrawal of ratings for fully redeemed AT1 bonds indicate a stable and positive financial standing for the bank.
Union Bank of India announced that Brickwork Ratings India Pvt. Ltd. has reaffirmed the 'AAA/Stable' rating for the bank's Tier II Bonds (under Basel III) of ₹1000 Crore. The rating action was taken on September 17, 2026.
Concurrently, Brickwork Ratings has withdrawn the ratings for the Additional Tier 1 (AT-1) Bonds (under Basel III) amounting to ₹1705 Crore. This withdrawal is due to the full redemption of these bonds. The AT-1 bonds, including ISIN INE692A08110, INE692A08128, and INE692A08136, were redeemed on December 15, 2025, January 9, 2026, and January 29, 2026, respectively, through the exercise of the bank's call option.
The reaffirmation of the Tier II bond rating reflects the bank's strong operational credit profile, comfortable capital buffer levels, improving asset quality indicators, and sustained profitability. Union Bank of India is noted as the fifth-largest Public Sector Bank in India by total business. The rating also considers the bank's strong franchise, PAN-India branch network, and diversified advances profile. The bank's strategic shift towards granular Retail, Agriculture, and MSME (RAM) advances has strengthened its balance sheet quality. Key risk mitigation metrics such as a Provision Coverage Ratio (PCR) exceeding 95% and a Net NPA (NNPA) below 0.50% place UBI on par with leading public sector banks.
The bank's liquidity position is strong, with no negative cumulative mismatches across buckets up to 5 years as of June 30, 2026. The Liquidity Coverage Ratio (LCR) was 121.30% and Net Stable Funding Ratio (NSFR) was 118.72%, both above regulatory minimums.
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