Union Bank of India (UNBK IN) – Q3FY26 Result Update – Strong quarter; consistency in loan growth a key – BUY
Published on 15 Jan 2026
UNBK saw a strong quarter; as NIM/asset quality were better leading to a 32% beat on core PAT. CRR cut/better liquidity management drove rise in reported NIM by 9bps QoQ to 2.76%. However, due to repo cut and catch up in deposit growth, NIM may fall and bottom out in Q4FY26E. Gross slippage ratio was lower at 84bps (PLe 1.1%) while recovery was healthier resulting in negative net slippage that led to lower standard asset and loan loss provisions. Transition impact of ECL is estimated at Rs42-43bn and bank does not expect material effect as bank has enough PCR buffer while 95% of corporate book is rated BBB & above. We lower provisions over FY25-28E by 8-11bps leading to core PAT upgrade of ~2.5%. Consistency in loan growth/NIM remain key monitorables while asset quality remains strong. We tweak multiple to 1.0x from 0.9x and raise TP to Rs200 from Rs160 as we roll forward to Mar’27 ABV. Retain ‘BUY.’
