City Union Bank reported a net profit of ₹383 crore for the quarter ended June 30, 2026, marking a 25% year-on-year increase from ₹306 crore in Q1FY26. The profitability gain was driven by a 31% surge in net interest income (NII) to ₹820 crore, supported by robust growth in advances and deposits while maintaining a stable net interest margin (NIM) of 3.78%. This performance coincides with significant asset quality improvements, as gross non-performing assets (NPAs) fell to 1.73% from 2.99% a year ago, reducing provisioning pressures despite higher absolute provisions.

The Board of Directors approved the unaudited standalone financial results on July 28, 2026, in compliance with Regulation 30 and Schedule III Part A of the SEBI Listing Regulations, 2015. The results were subjected to a limited review by the Joint Statutory Central Auditors, P.B. Vijayaraghavan & Co and M. Srinivasan & Associates. The bank also disclosed that it has discontinued the maintenance of the Investment Fluctuation Reserve (IFR) following RBI circulars, transferring the existing amount to the General Reserve during the quarter.

Financial Performance Highlights

Interest income rose 24% to ₹1,985 crore, reflecting higher yields on advances and investments. Non-interest income remained flat at ₹244 crore. Operating expenses grew by 16% to ₹483 crore, lagging behind revenue growth and contributing to a decline in the cost-to-income ratio from 48.12% to 45.42%. Provisions increased to ₹198 crore from ₹145 crore in the prior year period.

Asset Quality and Balance Sheet Growth

The bank’s asset quality showed marked improvement during the quarter. Gross NPAs declined to ₹1,170 crore (1.73% of advances) from ₹1,617 crore (2.99%) in Q1FY26. Net NPAs reduced to ₹405 crore (0.61%) from ₹635 crore (1.20%). The provision coverage ratio stood at 85% including technical write-offs and 65% excluding them.

Balance sheet growth was robust, with total business rising 23% to ₹1,46,987 crore. Deposits increased by 21% to ₹79,342 crore, while advances grew by 25% to ₹67,645 crore. The current account savings account (CASA) ratio improved, with CASA balances reaching ₹21,094 crore, up 18% from ₹17,954 crore. The cost of deposits decreased to 5.56% from 5.95%, aiding margin stability.

What the Numbers Show

The divergence between the 31% rise in net interest income and the 21% increase in total income highlights the primary driver of profitability: core lending activities rather than fee-based services. While non-interest income remained stagnant at ₹244 crore, the expansion in NII was fueled by a 25% growth in advances outpacing deposit growth of 21%, leading to an average credit-deposit ratio of 86%. Furthermore, the reduction in gross NPA ratios from 2.99% to 1.73% alongside a stable NIM of 3.78% indicates genuine asset quality improvement rather than just provisioning strategies. The decline in cost of deposits to 5.56% from 5.95% demonstrates effective liability management, allowing the bank to maintain yield on advances at 9.79% without compressing margins significantly.

City Union Bank has scheduled an analyst conference call to discuss its financial performance for the first quarter of FY27. The earnings call, organized by Ambit Capital, is set to take place on July 28, 2026, providing a platform for the bank's leadership to outline quarterly results and future outlook.

Conference Call Details

The event will feature senior management from the bank, including the Managing Director & CEO, Executive Director, and Chief Financial Officer. The session will be moderated by Jignesh Shial from Institutional Equities at Ambit Capital. Participants can join the discussion via teleconference using specific access numbers provided for domestic and international investors.

Access Information

To facilitate seamless access, the bank has provided primary and international toll-free numbers. Investors are encouraged to use the DiamondPass feature to avoid wait times and dial in a few minutes prior to the scheduled start. The weblink for registration and further details has been made available on the bank's official website.