City Union Bank Posts Strong Q4FY26 Results on Fee Income and Asset Quality Gains

Mumbai | 29 April 2026 

City Union Bank (NSE: CUB) reported a strong Q4FY26, with core pre-provision operating profit (PPoP) rising 32.8% year-on-year to INR 5,508 million, driven by higher fee income and written-off account recoveries. 

What Did City Union Bank Report in Q4FY26? 

Net interest income (NII) came in at INR 7,858 million for Q4FY26, up 30.9% year-on-year from INR 6,003 million in Q4FY25. 

Key Q4FY26 figures, as reported: 

• Profit after tax (PAT): INR 3,596 million, up 24.9% YoY 

• Core PAT: INR 3,371 million, up 26.2% YoY 

• Core PPoP: INR 5,508 million, up 32.8% YoY 

• Other income: INR 2,905 million, up 15.6% YoY 

• Operating expenses: INR 4,967 million, up 21.0% YoY 

• Net interest margin (NIM): 3.7%, down 16 basis points quarter-on-quarter 

• Cost-to-income ratio: 46.2%, within the bank’s guided ceiling of 48.5% 

Total advances stood at INR 658,752 million at the end of Q4FY26, up 26.5% YoY. Total deposits reached INR 783,080 million, up 23.3% YoY. 

How Did Asset Quality Change? 

Asset quality improved materially on a year-on-year basis. 

• Gross NPA ratio: 1.9% in Q4FY26, down from 3.1% in Q4FY25 

• Net NPA ratio: 0.7%, down from 1.3% in Q4FY25 

• Provision coverage ratio: 64.7%, up from 60.1% in Q4FY25 

• Gross slippages: INR 1,990 million in Q4FY26, down 23.3% YoY from INR 2,595 million 

The bank set aside INR 1,200 million in total provisions during the quarter, of which INR 500 million represented additional buffer provisions. Higher fee income and written-off account recoveries during the quarter allowed the bank to create this buffer. 

PL Capital Research notes the bank has not yet observed any impact on asset quality from the ongoing US-Iran conflict. 

What Is the Bank’s Loan Mix and Growth Strategy? 

MSME loans remained the dominant segment, accounting for 37.5% of total advances in Q4FY26. The non-agriculture jewel loan book stood at INR 107,413 million, up 61.6% YoY. 

The bank has guided for loan growth of mid-to-high teens, targeting 2-3% above system credit growth. MSME share is expected to remain at 55-60% of the book, with jewel loans at 30-35% and the remainder in secured retail. 

Branch-led expansion across approximately 1,000 branches remains a stated strategic priority. 

How Could Regulatory Changes Affect the Bank? 

Revised liquidity coverage ratio (LCR) norms are expected to free up INR 35-40 billion of liquidity, the bank stated. This may allow it to increase its loan-to-deposit ratio (LDR), with a targeted range of 85-87%, supporting net interest margins amid broader macroeconomic uncertainty. 

The bank expects operating expense growth of 15-18% in FY27, driven by continued branch expansion. 

The incoming ECL provisioning framework is expected to allow banks to adjust provisions through opening reserves, which may reduce future profit and loss impact. 

Read the full PL Capital Research report on City Union Bank here. 

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