Union Bank of India reported a 9.7% increase in consolidated net profit for the December quarter at Rs 5,073.00 crore, driven by a sharp decline in provisions. The state-run bank demonstrated strong operational performance while maintaining focus on profitability over volume growth.

Financial Performance Overview

The bank's core financial metrics showed steady growth with net interest income rising 0.95% to Rs 9,328.00 crore. However, the net interest margin narrowed by 0.15 percentage points to 2.76%. Non-interest income for the quarter increased 2.82% to Rs 4,541.00 crore, contributing to overall revenue growth.

Business Growth Strategy

Managing Director and CEO Asheesh Pandey emphasized the bank's strategic shift towards profitability rather than volume growth. The bank deliberately shed over Rs 40,000.00 crore of bulk deposits and Rs 20,000.00 crore in inter-bank participation certificates (IBPC), which impacted overall growth numbers but improved profitability metrics.

Credit growth came in at 7.13%, matching the banking system's growth rate, while deposit growth was more modest at 3.36%. The bank has adopted newer computation methods for key metrics like cost of deposits and yield on advances to enhance operational efficiencies, though Pandey declined to share the net interest margin number under the older system of computation.

Asset Quality Improvement

Asset quality showed significant improvement with gross non-performing assets ratio declining to 3.06% from 3.29% in the previous quarter. Fresh slippages reduced substantially to Rs 1,820.00 crore from Rs 2,199.00 crore in the year-ago period, indicating better credit discipline.

Provisions and Risk Management

The bank's provisions declined sharply to Rs 322.23 crore from Rs 1,599.00 crore in the year-ago period, becoming a major contributor to profit growth. This reduction was attributed to the high provision coverage ratio of 95% and lower slippages.

However, Pandey noted a gap of Rs 4,200.00 crore between current provisions and those required under the expected credit loss-based system, which will be implemented in phases from April 1.

Special Relief Measures

The bank has extended support to clients affected by US tariffs, with 500 clients approaching for relief under RBI's special dispensation. Union Bank of India has already disbursed Rs 258.00 crore under this relief program, demonstrating proactive customer support.

Market Response

The Union Bank scrip closed 8.03% higher at Rs 179.50 on the BSE, significantly outperforming the benchmark which corrected by 0.29%. The strong market response reflects investor confidence in the bank's improved financial performance and strategic direction.

Union Bank of India reported robust financial performance for the third quarter ended December 31, 2025, with net profit rising 9.0% year-on-year to ₹5,016.77 crore compared to ₹4,603.63 crore in the corresponding quarter of the previous year. The bank's consolidated net profit for Q3FY26 stood at ₹5,072.69 crore, reflecting strong operational efficiency.

Financial Performance Highlights

The bank's total income for Q3FY26 reached ₹30,984.46 crore, marginally lower than ₹30,960.13 crore in Q3FY25. Interest earned remained stable at ₹26,443.41 crore compared to ₹26,543.56 crore in the same quarter last year. Other income contributed ₹4,541.05 crore during the quarter.

For the nine months ended December 31, 2025, the bank achieved net profit of ₹13,381.38 crore compared to ₹13,002.22 crore in the corresponding period, representing a growth of 2.9%.

Asset Quality Shows Marked Improvement

The bank demonstrated significant improvement in asset quality metrics during the quarter. Gross non-performing assets (NPAs) declined to ₹31,120.88 crore as of December 31, 2025, from ₹36,554.25 crore a year earlier. Fresh slippages for the quarter decreased to ₹1,660.00 crore from ₹1,980.00 crore in the previous quarter, indicating better credit quality management.

Net NPAs decreased to ₹5,102.15 crore from ₹7,568.36 crore in the same quarter last year, indicating effective recovery mechanisms and provisioning strategies.

Capital Adequacy and Profitability Ratios

The bank maintained robust capital adequacy with a Basel III ratio of 16.49% as of December 31, 2025, compared to 16.72% in the previous year. The Common Equity Tier 1 (CET1) ratio stood at 13.94%, providing adequate capital buffer for future growth.

The bank's return on assets improved to 1.35% from 1.30% year-on-year, while net profit margin expanded to 16.19% from 14.87%.

Segment Performance and Business Mix

Across business segments, Treasury Operations generated revenue of ₹7,446.20 crore in Q3FY26, while Retail Banking Operations contributed ₹12,083.79 crore. Corporate/Wholesale Banking Operations accounted for ₹10,407.56 crore in segment revenue.

The bank's advances portfolio stood at ₹9,90,865.02 crore as of December 31, 2025, compared to ₹9,20,178.24 crore in the previous year. Total deposits reached ₹12,22,855.88 crore, reflecting the bank's strong deposit mobilization capabilities.

Operational Efficiency and Cost Management

Operating expenses increased to ₹6,927.38 crore in Q3FY26 from ₹6,165.02 crore in Q3FY25, primarily driven by higher employee costs of ₹4,011.10 crore compared to ₹3,467.81 crore in the previous year. Despite higher costs, the bank maintained operational efficiency through improved asset quality and reduced provisioning requirements.

Provisions and contingencies (other than tax) decreased significantly to ₹322.23 crore from ₹1,599.05 crore in Q3FY25, reflecting the bank's improved asset quality and reduced credit risk provisions.