City Union Bank (CUB) has unveiled plans to achieve steady double-digit compound annual growth rate (CAGR) in advances, with a strategic focus on SME/MSME lending and a digital lending rollout. This strategy aligns with the bank's recent financial performance, which shows promising signs of growth and stability.

Strong Financial Performance

In the second quarter of fiscal year 2026 (Q2 FY26), City Union Bank demonstrated solid financial results:

The bank's performance shows a robust year-on-year growth across key financial indicators, reflecting the effectiveness of its strategic initiatives.

Focus on SME/MSME Sector

CUB's growth strategy centers on expanding its SME/MSME loan portfolio. This sector, known for its potential in driving economic growth, aligns well with the bank's expertise and risk management capabilities. The bank's emphasis on this segment is expected to contribute to its targeted double-digit CAGR in advances.

Digital Lending Expansion

In line with evolving banking trends, City Union Bank is implementing a digital lending rollout. This initiative aims to streamline the lending process, making it more accessible and efficient for customers, particularly in the SME/MSME sector. The digital push may enhance the bank's competitive edge in the rapidly digitalizing banking landscape.

Asset Quality and Deposit Strategy

The bank maintains a focus on asset quality, with gross non-performing assets (NPAs) reported below 1%. This low NPA level indicates effective risk management practices. Additionally, CUB is emphasizing granular retail deposits as part of its growth strategy, which could provide a stable funding base for its expansion plans.

Margin Stability

City Union Bank's strategy also includes maintaining margin stability. This approach suggests a balanced focus on growth and profitability, crucial for sustainable long-term performance in the banking sector.

The bank's multi-pronged strategy, combining SME/MSME focus, digital expansion, and prudent financial management, positions City Union Bank for potential sustained growth in the coming years. However, the success of these initiatives will depend on market conditions, economic factors, and the bank's execution capabilities.

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.