Union Bank of India received credit rating reaffirmations from CRISIL Ratings on December 11, 2025, with the rating agency maintaining its positive assessment of the public sector bank's financial strength and creditworthiness. The reaffirmation covers multiple debt instruments while reflecting the bank's improved operational performance and asset quality metrics.

Rating Actions and Instrument Details

CRISIL Ratings reaffirmed ratings on several key debt instruments while taking specific actions on others. The rating agency maintained its assessment across different categories of bonds with stable outlooks.

The withdrawal of rating on ₹1,000 crores of Tier-2 bonds was executed in line with CRISIL's withdrawal policy, following independent confirmation that these instruments were fully redeemed. All rating actions were verified on December 11, 2025.

Financial Performance and Asset Quality Improvement

The bank demonstrated significant improvement in asset quality metrics during the reporting period. Gross Non-Performing Assets (GNPA) showed a declining trend, reflecting enhanced recovery efforts and better credit management practices.

The improvement in GNPA stems primarily from the retail book and MSME segments, supporting overall asset quality metrics. Credit costs remained range-bound between 0.40%-0.50% of average total assets since fiscal 2024, indicating controlled provisioning requirements.

Capital Adequacy and Profitability Metrics

Union Bank maintained strong capital adequacy ratios well above regulatory requirements. The bank's capitalization benefited from equity infusion and strong internal accruals, providing adequate buffers for business growth.

The bank reported consolidated profit after tax of ₹8,419 crores for H1 FY26 compared to ₹8,322 crores in H1 FY25. For the full fiscal 2025, the profit was ₹17,922 crores against ₹13,708 crores in the previous fiscal, demonstrating sustained profitability improvement.

Operational Scale and Market Position

Union Bank maintains sizeable scale of operations with significant market presence in the domestic banking system. The bank holds a 4.00% share each in deposits and advances in the domestic banking system as of September 30, 2025.

The bank benefits from its extensive branch network and wide reach in rural and semi-urban areas, facilitating access to a stable resource base. Government ownership stood at 74.70% as of September 30, 2025.

Rating Rationale and Outlook

CRISIL's ratings factor in the expectation of strong support from the majority stakeholder, Government of India, along with the bank's adequate capital position and sizeable scale of operations. These strengths are partially offset by average, though gradually improving, asset quality and profitability metrics. The stable outlook reflects the rating agency's assessment that Union Bank should continue to benefit from strong government support and its large size and scale, while maintaining current asset quality levels going forward.

Union Bank of India , a prominent public sector bank, has announced its decision to redeem two bond series totaling ₹1,205 crores through the exercise of call options. This strategic move, subject to regulatory approval, demonstrates the bank's proactive approach to managing its debt obligations and optimizing its capital structure.

Bond Redemption Details

The bank plans to redeem the following bonds:

It's important to note that if any coupon or redemption payment date falls on a non-business day, the payment will be made on the next business day. For instance, the payment for ISIN INE692A08128 will be processed on January 12, 2026, instead of January 11, 2026.

Financial Implications

This redemption aligns with Union Bank of India's ongoing efforts to manage its liabilities effectively. Based on the bank's recent financial data:

• The bank's total assets stood at ₹1,511,329.40 crores, showing a 7.80% increase from the previous year.
• Total equity increased by 16.64% year-over-year, reaching ₹113,834.10 crores.
• The bank's reserve and surplus grew by 18.07% to ₹106,096.50 crores, indicating improved financial strength.

The redemption of these bonds, while a small fraction of the bank's overall liabilities, reflects Union Bank's commitment to active debt management and maintaining a healthy balance sheet.

Investor Considerations

For bondholders, this announcement signals the need to prepare for the upcoming redemption. Investors holding these bonds should take note of the record dates to ensure smooth processing of their redemption payments.

As Union Bank of India continues to navigate the dynamic banking landscape, such strategic financial decisions underscore its focus on maintaining a robust capital position and optimizing its debt profile. This move may potentially impact the bank's interest expenses and capital adequacy ratios in the coming quarters, although the overall effect is likely to be modest given the scale of the bank's operations.

Investors and market observers will be keen to see how Union Bank of India utilizes this opportunity to further strengthen its financial position and support its growth objectives in the competitive banking sector.