Q1 2027 City Union Bank Ltd Earnings Call Transcript
Key Points
- City Union Bank Ltd (BOM:532210) achieved its highest-ever quarterly operating profit of INR581 crore and PAT of INR383 crore, both up 29% and 25% YoY respectively.
- The bank reported strong credit growth of 25% YoY, with advances reaching INR67,645 crore, driven by MSME, gold loans, and secured retail.
- Asset quality improved significantly, with gross NPA falling to 1.73% from 2.99% YoY, and net NPA declining to 0.61% from 1.2%.
- Recovery exceeded slippages for the quarter (INR206 crore vs INR195 crore), a trend expected to continue, supported by SMA-2 remaining below 1%.
- The bank maintained a healthy CD ratio of 85% and improved its provision coverage ratio (with technical write-offs) to 85% from 79% YoY.
- Net interest margin (NIM) is expected to decline to 3.65%-3.7% in coming quarters due to rising term deposit costs, down from 3.78% in Q1.
- Cost of funds increased due to higher borrowing costs (INR94 crore vs INR72.5 crore in Q4), pressuring profitability.
- MSME loan growth was slower at 15% YoY, partly due to a drop in utilization rates from 73% to 70%, indicating cautious business sentiment.
- Fee income (other income) was lower YoY at INR243 crore, with management expecting a catch-up later in the year.
- The bank faces potential margin pressure from rising deposit costs and competition in gold loans, though it has not cut rates.
Ladies and gentlemen, good day and welcome to City Union Bank Limited's Q1 FY27 earnings conference call, hosted by Ambit Capital Private Limited.
(Operator Instructions) Please note that this conference is being recorded.
I now hand the conference over to Mr. Jignesh Shial from Ambit Capital. Thank you and over to you, sir.
Thank you, Neeraj. Good evening, everyone. On behalf of Ambit Capital, I would like to welcome you, all, to Q1 FY27 earnings call of City Union Bank.
We have along with us Mr. R Vijay Anandh, MD and CEO; Mr. V Ramesh, Executive Director; and Mr. J. Sadagopan, CFO.
I will now hand over the call to Mr. R Vijay Anandh, MD and CEO, for his opening remarks. Over to you, sir.
Thank you. Thanks, Jignesh. Good evening, everyone.
I have been joined by my ED, Shri Ramesh; and CFO, J Sadagopan; and
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