City Union Bank , a prominent private sector lender, has reported a robust financial performance for the second quarter of fiscal year 2026, with significant improvements in profitability and asset quality.

Key Financial Highlights

The bank's financial results for Q2 FY2026 showcase strong growth across various parameters:

Profitability and Revenue Growth

City Union Bank witnessed a substantial 15.1% year-on-year increase in its net profit, which rose to 3.28 billion rupees in Q2 FY2026 from 2.85 billion rupees in the same quarter last year. This growth was supported by a 15.6% surge in revenue, which reached 16.53 billion rupees, up from 14.30 billion rupees in Q2 FY2025.

Improved Asset Quality

The bank's asset quality showed significant improvement during the quarter:

• Gross Non-Performing Assets (NPAs) ratio decreased to 2.42% from 3.54% in the same quarter last year.
• Net NPA ratio improved to 0.90%, down from 1.82% in Q2 FY2025.

This improvement in asset quality reflects the bank's effective risk management strategies and robust credit assessment processes.

Reduced Provisions

City Union Bank's provisions for the quarter decreased to 0.57 billion rupees from 0.70 billion rupees in the same quarter last year, indicating improved asset quality and potentially lower credit costs.

Management Commentary

Dr. N. Kamakodi, MD & CEO of City Union Bank, stated in the bank's official release, "Our Q2 FY2026 results demonstrate the bank's resilience and strategic focus. The significant improvement in our asset quality, coupled with strong growth in profitability, underscores our commitment to sustainable banking practices and shareholder value creation."

Conclusion

City Union Bank's Q2 FY2026 results reflect a positive trajectory, with substantial improvements in profitability and asset quality. The bank's ability to grow its revenue while simultaneously reducing NPAs and provisions indicates effective management and a robust business model. As the banking sector continues to navigate economic challenges, City Union Bank's performance suggests it is well-positioned for sustained growth and stability in the coming quarters.

City Union Bank Limited has secured a $50 million commitment from the International Finance Corporation (IFC), a member of the World Bank Group. This strategic move aims to support Micro, Small, and Medium Enterprises (MSMEs) in their transition to energy-efficient and cost-effective solutions.

Key Details of the Agreement

Implications for MSMEs and Climate Goals

The financing initiative is expected to have several impacts:

1. MSME Support: By helping MSMEs adopt renewable and efficient energy solutions, the initiative aims to reduce their operational expenses and improve productivity.
2. Economic Contribution: MSMEs, which contribute nearly 30% of India's GDP, may benefit from this green financing initiative, potentially enhancing their competitiveness.
3. Environmental Impact: The partnership aligns with India's goal of achieving net-zero emissions by 2070, promoting the adoption of green technologies in the MSME sector.

Bank's Perspective

City Union Bank's move to secure this commitment demonstrates its focus on sustainable banking practices. By facilitating green financing for MSMEs, the bank is positioning itself as a player in India's transition to a low-carbon economy.

Regulatory Compliance

In compliance with SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015, City Union Bank has informed the stock exchanges about this agreement. The bank has stated that the drawdown of the loan will take place at a later date, with no amount currently outstanding.

This partnership between City Union Bank and IFC marks a step towards integrating sustainability into the banking sector while supporting the MSME sector. The initiative's impact on participating MSMEs and the broader goal of sustainable economic development remains to be seen as it unfolds.