City Union Bank (CUBK IN) – Q2FY26 Result Update – Quality of core revenue improving each quarter – BUY
Published on 04 Nov 2025
CUB saw yet another stellar quarter with beat on all fronts. Core PPoP was 6.7% beat led by superior loan growth, better margins and higher fees. Asset quality continues to remain benign as slippages have been controlled while recoveries have surpassed slippages since the past 9 quarters. Growth has been strong without compromising on margin, due to benefit of lower reprising of deposits. Due to asset quality tailwinds, credit growth could surprise positively. Bank expects NIM benefit to continue in H2FY26 led by further repricing of Rs180bn of deposits. Since asset quality risks have abated and PCR has touched 63%, provisions may be created only towards ECL transition; management does not expect a significant impact. Due to better growth and margins, we upgrade core PAT for FY26/27E by avg. 4.5%. We increase multiple on Sep’27 ABV to 1.6x from 1.5x and raise TP to Rs265 from Rs245. Retain ‘BUY’.
