City Union Bank share price soars 2% to reach highest level since December 2022, gains 10% in May
City Union Bank's share price extended its winning streak for the third straight day on Wednesday, May 14, gaining another 2% in trade to touch a 28-month high of ₹ 195 apiece. The stock last traded at these levels in December 2022. With the steady rise, shares are now approaching their record high of ₹ 249.35, last seen in January 2020.
The stock has maintained a consistent upward trend since the beginning of May, as investor sentiment improved following the lender's return to a growth trajectory in the March quarter. This recovery was driven by its ongoing digital transformation efforts, which also prompted brokerages to raise their target multiples, further fueling the rally.
Notably, the stock ended both April and March in the green, with gains of 12.33% and 6.35%, respectively. The rally has extended into the current month, with the stock rising another 10% so far.
Following the bank's in-line performance, Axis Securities revised its target price on City Union Bank to ₹ 225 apiece, maintaining its 'Buy' rating.
Likewise, IDBI Capital retained its 'Buy' rating with a target price of ₹ 215. Anand Rathi also maintained a 'Buy' with a 12-month target of ₹ 218, while Prabhudas Lilladher raised its target to ₹ 210 from ₹ 200, reiterating its 'Buy' stance.
City Union Bank reported a 13% YoY increase in net profit to ₹ 288 crore for the quarter ended March 2025, driven by stronger fee income, particularly from insurance and processing charges. Net Interest Income (NII) rose 10% YoY to ₹ 600 crore, while Net Interest Margins (NIMs) improved marginally by 2 basis points, as the bank shed lower-yielding loans.
Pre-provision operating profit surged 25.3% YoY to ₹ 441 crore. Credit costs remained largely stable at 60 basis points, compared to 61 bps in the previous quarter. Non-interest income saw robust growth of 43% YoY to ₹ 251 crore, supported by strong fee-based revenues.
On the asset quality front, gross NPA improved to 3.09% from 3.36% QoQ, driven by higher write-offs. Management remains confident of further improvement in asset quality, supported by controlled slippages and healthy recoveries.
For FY26, slippages are expected to decline to ₹ 650–700 crore, compared to ₹ 815 crore in FY25. Looking ahead, the bank aims to maintain the business momentum it has gained in FY25 while targeting a sustainable Return on Assets (RoA) of 1.5%.
Axis Securities highlighted potential NIM pressures in the coming quarters due to yield compression in the EBLR-linked loan book. However, the brokerage believes that the impact will be cushioned by multiple initiatives undertaken by the bank to offset margin declines.
Axis expects City Union Bank to deliver consistent RoA and RoE of 1.5–1.6% and 12–14%, respectively, over FY26–27E, supported by strengthening fee income, steady NIMs, and controlled credit costs despite higher operational expenses.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
9 hours ago
- Time of India
Tribal designer sends NID legal notice for erasing authorship
Vadodara: Tribal designer and honorary director of the Tejgadh-based Adivasi Academy, Sudhir John Horo, issued a legal notice to the director of India's premier design institute, the National Institute of Design (NID) in Ahmedabad, alleging erasure of tribal authorship. Tired of too many ads? go ad free now Last month, the country's premier design institute was in the spotlight after Horo, an alumnus of NID, alleged that his name had been removed from the records pertaining to his past work and from course materials he presented at the institute as a visiting faculty member. Horo said that considering the continued silence and confirmed tampering of institutional metadata records, authorship attributions and academic file histories at NID, he served the second legal preservation notice to the institute on Saturday. "Following the original legal preservation notice on May 27 and submission of a comprehensive metadata correspondence report, this second notice is being formally issued to hold NID and affiliated institutional actors accountable for any deletion, redaction, renaming or unauthorized alteration of files, course materials, presentation decks, authorship attributions or archival records related to my contributions," the notice states. The notice says Horo was not credited for India's national branding projects, including the "India Future of Change", the "Indiafrica Project", the "Invest India" visual identity, TDF-linked curriculum or elective documentation, other presentations and related frameworks developed between 2010 and 2017. The national branding and public diplomacy projects were carried out with the external affairs ministry, some creations of which were showcased at the World Economic Forum's annual meetings and during the World Expo Dubai. Tired of too many ads? go ad free now Jharkhand-born Horo said that instead of giving him individual credit, institutional phrases like "teamwork" were used, effectively erasing his authorship. An NID spokesperson earlier told TOI that the matter is being thoroughly analysed and investigated by an internal committee. The institute said it will be sharing the findings of the committee.
Time of India
21 hours ago
- Time of India
Haryana: Affordable housing e-draw portal to be linked with Aadhaar to tackle irregularities
GURUGRAM : Govt's online portal for drawing of lots in affordable housing schemes will directly cross-check and verify applicant details with information in the Aadhaar card to make the process more transparent and eliminate chances of duplication or manipulation. Officials of the department of town and country planning (DTCP) said on Friday that the updated portal – called TCP Haryana – will fetch applicant details such as name, address and mobile number from the Aadhaar card. This will prevent manual data entry errors and manipulation while ensuring that only eligible candidates are considered for allotments. The move comes in response to irregularities uncovered in the 2023 housing draw of Aster Avenue 36 in Sector 36, Sohna. During the draw of lots for 702 flats at the society, those with addresses given as 'Sohna City' were considered eligible for the scheme, limiting the pool to 2,200 entries out of 51,000 applicants. This was blamed on a technical error. Cross-checking with Aadhaar would do away with chances of such errors, officials said. The Aster Avenue draw was cancelled after an internal probe, and a fresh draw was conducted. But 26 applicants were found to have been repeated in both the shortlists, raising more concerns about fairness and the integrity of the system. "Going forward, the Aadhaar-linked system will automatically populate the applicant's details and verify if they have previously been allotted flats under any affordable housing scheme. If found ineligible, their application will be auto-rejected by the system," said Renuka Singh, senior town planner, DTCP. "All past applicant data from earlier schemes is now being integrated into this upgraded software," Singh said. Additionally, the system will prevent any duplicate entries and ensure that no one can bypass eligibility rules. The new mechanism is expected to significantly reduce the administrative burden and potential biases associated with manual data handling. The Aster Avenue 36 matter is currently pending before the Punjab and Haryana high court, and the next hearing is scheduled for July 9. Applicants who were declared successful in the original draw have yet to receive refunds, while allotment letters for 702 flats drawn in the second round remain on hold because of ongoing legal proceedings.
India Gazette
a day ago
- India Gazette
Lending rates to fall by 30 bps after RBI policy cut: SBI Report
New Delhi [India], June 7 (ANI): Lending rates are expected to fall by around 30 basis points (bps) following the recent policy rate cut, according to a report by the State Bank of India (SBI). The report highlighted that the immediate impact will be seen on loans linked to the external benchmark lending rate (EBLR), which make up about 60 per cent of the loan book of All Scheduled Commercial Banks (ASCBs). SBI said 'The steep cut on policy rates is expected to pass on to the EBLR linked loan book immediately with ASCB share of 60 per cent. Thus immediate impact on average lending rate could be around 30'. The report said the sharp policy rate cut will quickly pass through to the EBLR-linked loans, lowering borrowing costs for many customers. However, this drop in lending rates may affect banks' margins. To help manage this impact, the Reserve Bank of India (RBI) also reduced the Cash Reserve Ratio (CRR), which is expected to bring down the cost of funds for banks. SBI stated 'The reduction in CRR may not mathematically translate to any change in deposits and lending rates, however, it may have positive impact on margins (3-5 bps on NIM) of the banks'. The report estimated that bank margins or Net Interest Margins (NIM) could improve by 3 to 5 bps due to the lower CRR. The CRR cut will also reduce the base money (M0) in the system, increasing the money multiplier by 20 to 30 bps, which could have a positive effect on overall liquidity. Meanwhile, banks have already started lowering fixed deposit (FD) rates. Since February 2025, FD rates have been reduced by 30 to 70 bps. The report expects this trend to continue, with further cuts likely in the coming months. Past data shows that cuts in policy rates generally lead to pressure on bank margins. While the exact impact will differ across individual banks, a general compression in NIM is expected. The SBI report added that the future path of monetary policy will depend on economic data and evolving conditions. While policy space is limited, the recent large profit transfer from the RBI to the government has improved fiscal flexibility. For now, the report expects no change in policy rates in the next quarter. (ANI)
