City Union Bank (CUB) has unveiled its strategic growth plans for the fiscal year 2026, setting an ambitious credit growth target of 12-14%. The bank's focus will be primarily on expanding its presence in the Micro, Small, and Medium Enterprises (MSME) and retail segments.

Strategic Focus on MSME and Retail

CUB's decision to concentrate on MSME and retail segments aligns with the bank's historical strengths and the current market opportunities. This targeted approach is expected to drive sustainable growth while managing risk effectively.

Technology-Driven NPA Reduction

In addition to its growth strategy, CUB has announced plans to reduce non-performing assets (NPAs) through the implementation of advanced technology. The bank will be focusing on two key areas:

1. Enhanced Collections: CUB plans to leverage technology to improve its collection processes, potentially through the use of data analytics and automated reminders.

2. Improved Credit Monitoring Systems: The bank aims to strengthen its credit monitoring capabilities, likely involving real-time tracking of loan performance and early warning systems for potential defaults.

Q1 FY26 Financial Performance

CUB's focus on growth is supported by its strong performance in the first quarter of FY26. Key highlights include:

Capital Adequacy and Future Outlook

With a strong capital adequacy ratio of 23.10% under Basel III norms, CUB is well-positioned to support its growth ambitions. The bank's focus on technology-driven processes for NPA reduction, coupled with its strategic emphasis on MSME and retail segments, sets a positive tone for achieving its credit growth targets in FY26.

As CUB moves forward with its growth strategy, the banking sector will be watching closely to see how effectively the bank can balance its expansion plans with maintaining asset quality in the dynamic economic environment.

City Union Bank (CUB) has reported a robust financial performance for the first quarter, with a significant increase in net profit and improved asset quality. The private sector lender's results demonstrate resilience in a challenging economic environment.

Strong Profit Growth

The Kumbakonam-based bank posted a net profit of Rs 306.00 crore for Q1, representing a substantial 16% increase from Rs 264.00 crore in the corresponding period last year. This growth in profitability underscores the bank's effective management and strategic initiatives.

Balance Sheet Expansion

CUB's balance sheet showed impressive growth, with deposits increasing by 20% year-on-year to Rs 65,734.00 crore. Advances also saw a significant rise of 16% to Rs 54,020.00 crore, bringing the total business to Rs 1,19,754.00 crore.

Revenue Performance

The bank's net interest income expanded by 15% to Rs 625.00 crore. Additionally, non-interest income surged by 27% to Rs 244.00 crore, driven primarily by treasury profits of Rs 64.00 crore. This diversification of income sources demonstrates the bank's ability to generate revenue from multiple streams.

Improved Asset Quality

One of the highlights of CUB's Q1 performance was the significant improvement in its asset quality metrics:

• Gross Non-Performing Assets (GNPA) ratio decreased to 2.99% from 3.88% in the previous year.
• Net Non-Performing Assets (NNPA) ratio improved to 1.20% from 1.87% year-over-year.

This reduction in NPAs suggests that the bank's risk management strategies and recovery efforts are yielding positive results.

Financial Highlights

Key Performance Indicators

• Capital Adequacy Ratio: 23.10%
• Return on Assets: 1.55%
• Net Interest Margin: 3.54% (remained stable)
• CASA Deposits: Rs 17,951.00 crore (11% growth)

Operational Efficiency

While the bank's operating expenses increased by 15% to Rs 418.00 crore, this growth was in line with the expansion of its business activities and did not negatively impact overall profitability.

City Union Bank's Q1 results demonstrate its ability to grow profitably while maintaining asset quality. The bank's focus on expanding its presence, improving operational efficiency, and maintaining a strong capital position sets a solid foundation for sustained growth in the coming quarters.