Union Bank of India has issued US$ 600 million in senior unsecured dual tranche notes, split equally between maturities in 2029 and 2031. The bank will use the proceeds to fund its Dubai International Financial Centre (DIFC) branch operations and meet general corporate purposes.

The issuance, executed through the bank's DIFC branch, involves two distinct tranches with varying tenors and coupon rates. The notes are expected to receive investment-grade ratings from major agencies, reflecting the bank's credit profile in international markets.

Issuance Details

The total issue size is divided into two equal tranches of US$ 300 million each. Both tranches are unsecured and rank senior in the capital structure. The allotment date for both tranches is August 28, 2026.

Interest payments for both tranches commence on February 28, 2027, and continue semi-annually on February 28 and August 28 until maturity. The notes are listed on NSE IFSC Limited.

Credit and Use of Proceeds

The notes are expected to be rated BBB by S&P Global and BBB- by Fitch Ratings. As unsecured instruments, they carry no charge over specific assets but hold senior ranking relative to subordinated debt.

The net proceeds will primarily support the development and expansion of the bank's DIFC branch business. Additional funds will address the branch's funding requirements and serve general corporate purposes. This move aligns with the bank's strategy to deepen its presence in international financial hubs.

Union Bank of India reported a 29% year-on-year rise in net profit for the first quarter of FY27, reaching $563mn. The public sector lender also posted its highest-ever quarterly operating profit of $845mn, supported by sustained net interest income and improved asset quality metrics.

The bank filed its investor presentation with stock exchanges on August 21, 2026, ahead of a debt investor roadshow. The disclosure outlines the bank’s financial performance and strategic positioning as it seeks to raise funds through unsecured notes listed on the NSE IFSC.

Financial Performance

Union Bank of India delivered robust profitability metrics in Q1FY27. Net interest income (NII) stood at $1,060mn, maintaining stability above the $1,000mn mark for the quarter. Operating revenue reached $1,547mn, reflecting a margin expansion to 54% from 51% in the corresponding quarter of FY26.

Provisions for the quarter were contained at $103mn, significantly lower than the $176mn recorded in Q1FY26. This reduction, combined with stable tax outflows of $179mn, contributed to the bottom-line growth. The bank’s return on assets (RoA) improved by 33 basis points to 1.36%, while return on equity (RoE) expanded by 165 basis points to 17.23%.

Asset Quality and Capital Position

Asset quality continued to improve, with gross non-performing assets (GNPA) ratio declining to 2.65% from 2.82% at the end of FY26. Net NPA ratio tightened further to 0.47% from 0.48%. The provision coverage ratio (PCR) strengthened to 95.05%.

Fresh slippages in Q1FY27 were recorded at $218mn, compared to $214mn in the preceding quarter. Total recoveries, including transfer to write-off, amounted to $244mn. The delinquency ratio fell to 0.82% from 0.85% in Q4FY26.

Capital adequacy remains strong, with the Capital to Risk-Weighted Assets Ratio (CRAR) rising to 18.46% from 18.10% in FY26. Common Equity Tier 1 (CET I) capital ratio increased to 16.38%.

Balance Sheet and Funding

Total advances crossed the $100bn mark in FY25 and reached $115.8bn as of June 2026. Retail, Agriculture, and MSME (RAM) segments constitute 55.5% of the total advances portfolio. Domestic deposits stood at $135.5bn, with the Current Account Savings Account (CASA) ratio holding steady at 35.1%.

The bank plans to utilize proceeds from the upcoming note issuance to meet funding requirements for its Dubai International Financial Centre (DIFC) branch and for general corporate purposes. The issue will be governed by English law and rated BBB/Stable by S&P and BBB-/Stable by Fitch.