City Union Bank (CUBK IN) – Q3FY26 Result Update – Margins and loan growth surprise yet again – BUY
Published on 03 Feb 2026
CUB saw yet another strong quarter with a 15.2% beat on core PAT owing to better core revenue i.e. NII/NIM and fees. Credit growth at 21.5% YoY and 5.9% QoQ was also higher suggesting there was no compromise on NIM to achieve growth. Reported NIM increased by 29bps QoQ to 3.9% due to (1) better loan yields (led by robust growth in higher yielding gold loans, which are fixed rate) and (2) 16bps fall in deposit cost due to repricing. Bank expects NIM to remain stable as negative impact of Dec’25 repo cut would be offset by further deposit repricing while fixed rate loan exposure is at ~30%. Asset quality continues to remain benign as recoveries have surpassed slippages since past 10 quarters. Due to better NIM/growth, we upgrade core PAT for FY27/28E by avg. 7.3%. With core RoA for FY28E like to be 1.5%, we increase multiple to 1.7x from 1.6x and raise TP to Rs310 from Rs265 as we roll over to Mar’28 ABV. Retain ‘BUY’.
