Union Bank of India has announced a target to improve its Current Account Savings Account (CASA) ratio to 36%. This strategic objective runs parallel to the bank's existing plan to increase its Net Interest Margin (NIM) to over 3%.

Strategic focus on profitability

The bank's leadership has identified improving profit margins on a sustained basis as a central strategic priority. The new target for the NIM provides a concrete metric for this broader goal. By aiming for a margin above 3%, the institution signals a deliberate approach toward building a more resilient and profitable business model.

Profit margins are a key indicator of a bank's operational efficiency and its ability to generate returns relative to its income base. The shift from general statements about margin enhancement to specific targets for both NIM and CASA indicates a refined focus on core banking profitability drivers.

Implications for financial performance

The Managing Director's remarks highlight the importance placed on consistent profitability improvement as a guiding principle for Union Bank of India's operations. While previous communications emphasized general efforts across revenue generation, cost management, and asset quality, the current data specifies the NIM trajectory and the CASA ratio target.

This focus typically encompasses efforts to optimize asset yields while managing funding costs. The bank's leadership appears to be signalling a long-term orientation toward margin improvement, reinforcing the institution's strategic priorities to stakeholders.

What the numbers show

The simultaneous disclosure of a 3% NIM target and a 36% CASA ratio target highlights a dual-pronged approach to balance sheet optimization. A higher CASA ratio reduces the cost of funds, which is a primary lever for expanding the net interest margin. The combined data suggests the bank is targeting structural improvements in both asset yields and liability costs to drive profitability.

Union Bank of India reported total debt securities issued and outstanding of ₹16,083 crore as of September 30, 2026. The disclosure covers instruments maturing between November 2026 and March 2036, alongside perpetual bonds.

The filing was submitted to BSE and NSE pursuant to SEBI Circular No. SEBI/HO/DDHS/DDHS-PoD/P/CIR/2025/137 dated October 15, 2025. The statement details 12 distinct debt instruments, including five perpetual bonds and seven term loans or notes.

Debt composition and maturity profile

The bank’s debt portfolio is dominated by perpetual instruments, which account for ₹6,983 crore of the total outstanding amount. These bonds carry coupon rates ranging from 8.40% to 8.70%. The remaining ₹9,100 crore comprises term debt with fixed maturity dates.

The nearest maturity is scheduled for November 24, 2026, involving a ₹750 crore instrument with a 7.74% coupon. The longest-dated debt matures in March 2036, carrying a 7.16% coupon rate for a ₹3,000 crore issuance made in March 2026.

Key debt instruments

Among the term debt securities, the highest coupon rate is observed on the instrument maturing in November 2029. This ₹1,000 crore bond carries an 8.93% annual coupon. In contrast, the most recent issuance in March 2026 has the lowest coupon rate in the term debt category at 7.16%.

Most term debt instruments include embedded call options. For instance, the bonds maturing in 2035, 2036, and 2037 feature call options exercisable on the tenth anniversary from the deemed date of allotment. Several other instruments have call options on the fifth anniversary.

What the numbers show

A divergence exists between the cost of capital raised in earlier years versus recent issuances. Perpetual bonds issued between 2021 and 2022 carry higher coupons (8.40%-8.70%) compared to the long-term debt issued in 2026 (7.16%). This suggests a potential reduction in the bank's marginal cost of borrowing for new long-term obligations compared to its historical AT1 capital costs, although these instruments serve different regulatory capital purposes.

The concentration of call options on perpetual bonds indicates that Union Bank retains flexibility to redeem these instruments if market conditions allow, potentially lowering future interest outgo if refinancing at lower rates becomes feasible.