Union Bank Profit Jumps 30% as Asset Quality Sharpens and Lending Increases

Efficiency Gains Drive Net Earnings

Union Bank of India (UBI) delivered a robust financial performance in the opening quarter of fiscal 2027, recording a net profit of ₹5,332 crore. This represents a 29.57% increase compared to the ₹4,116 crore booked in the same period last year. The profit surge stems largely from a 10.15% rise in net interest income, which climbed to ₹10,037 crore from ₹9,113 crore. Managing Director and CEO Asheesh Pande confirmed during a media briefing that the bank intends to focus on defending its net interest margin, which edged up to 2.8% from 2.76% a year ago.

Asset Quality and Deposit Dynamics

The bank reported substantial improvement in its loan book health. Gross Non-Performing Assets (GNPA) fell by 87 basis points to 2.65%, down from 3.52% in the previous year's first quarter. Net NPA also showed progress, shrinking to 0.47% from 0.62%. However, the lender faces a shifting balance between lending and savings. While total loans expanded by 12.5% to reach ₹10.9 lakh crore, total deposits grew by a more modest 3.52% to ₹12.8 lakh crore.

Strategic Shift Toward Retail Funding

The disparity between loan and deposit growth pushed the credit-to-deposit ratio to 86.1%, up significantly from 79.2% last year. To address this, Pande noted that the bank will prioritize accumulating retail term deposits and building its Current Account to Savings Account (CASA) base. Key metrics for the quarter include:

• CASA ratio reached 35.09%, a yearly increase of 258 basis points.
• Year-on-year net profit growth of nearly 30%.
• Net interest margin improvement of 4 basis points.
• Reduction of net bad loans to under 0.5%.

While the CASA ratio improved year-on-year, it saw a marginal 11-basis-point decline compared to the quarter ending March 2026, highlighting the competitive environment for liquid deposits.

Source: The Hindu — Business