Union Bank (I) Q1 FY27 Results (NSE: UNIONBANK)
Signal: Earnings grew
The read
Union Bank delivered a strong PAT beat (27.4% YoY) on the back of a sharp 41% decline in provisions and a 15.9% operating profit improvement, while asset quality continued to improve (GNPA 2.65%, net NPA 0.47%). However, revenue growth remained subdued at 2.2% YoY, with NII growth of 10.6% YoY reflecting margin expansion as interest expense declined. The trajectory shows sustained profitability improvement, but top-line growth remains a concern in a low-yield environment.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹32,660.24 Cr | 2.2% | -0.04% |
| EBIT | ₹8,040.25 Cr | 15.92% | |
| Net profit | ₹5,641.52 Cr | 27.41% | |
| EPS | ₹7.39 | 27.41% | |
| EBIT margin | 24.62% |
P&L walk
Revenue growth muted at 2.2% YoY, but NII grew 10.6% YoY as interest expense declined 3.6% (due to lower cost of deposits). Operating profit surged 15.9% YoY, driven by lower provisions (down 37% YoY) and improved cost-to-income (22.70% vs 22.44% YoY, but QoQ improvement). Provisions for NPA fell 11.7% YoY. PAT rose 27.4% YoY, aided by higher share of profit from associate (₹27,335 lakh vs ₹29,137 lakh YoY, slightly lower). EPS grew in line with PAT.
Segments
Corporate/Wholesale Banking segment result more than doubled YoY (₹2,06,373 Lakh vs ₹1,14,747 Lakh), driving the overall profit growth; Treasury result declined 25% YoY (₹1,09,825 Lakh vs ₹1,46,482 Lakh). Retail Banking result grew 24% YoY.
Key positives
- PAT up 27.4% YoY to ₹5,642 Cr, driven by lower provisions (down 41.2% YoY) and operating profit growth of 15.9% YoY.
- Asset quality improved: GNPA fell to 2.65% (vs 3.52% a year ago), net NPA to 0.47% (vs 0.62%).
- Operating profit margin expanded to 24.62% (up 292bps YoY) as cost-to-income improved QoQ to 22.70%.
- Capital adequacy ratio strong at 19.15% (CET1 17.08%), well above regulatory minimum.
Key concerns
- Revenue (total income) growth was only 2.2% YoY, with interest earned growing just 1.2% YoY.
- Treasury segment result declined 25% YoY due to lower investment income.
- Other income growth of 7.5% YoY was modest, and the transfer of IFR to general reserve (₹1,701 Cr) is a one-time accounting adjustment.
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