UNIONBANK - Union Bank (I)

📊 NSE: UNIONBANK 🏢 Banks - Public Sector 📅 Last Updated: 12/14/2025 14:44

💰 Financial Performance

Revenue Growth by Segment

Total income (net of interest expense) for H1 FY2026 was INR 28,621 Cr. The loan book is composed of Retail (25.31%), Agriculture (17.87%), MSME (15.64%), and Corporate/Others (41.18%). Business growth was 4.8% over the last 6 quarters, moving from INR 21.08 lakh Cr to INR 22.09 lakh Cr.

Geographic Revenue Split

Not disclosed in available documents, though the bank operates a pan-India network of 8,655 branches as of September 30, 2025.

Profitability Margins

Net Profit for Q2 FY2026 was INR 4,249 Cr, up 3.25% QoQ but down 9.97% YoY. Operating Profit for H1 FY2026 stood at INR 13,723 Cr, a decline of 13.68% YoY. Return on Assets (RoA) was 1.13% in H1 FY2026 compared to 1.25% in FY2025.

EBITDA Margin

Operating Profit as a percentage of Average Total Assets (ATA) moderated to 1.70% in H1 FY2026 from 2.13% in H1 FY2025. Core operating profitability remains healthy but is under pressure due to NIM compression.

Capital Expenditure

The bank raised INR 8,000 Cr via a Qualified Institutional Placement (QIP) in FY2024 to bolster capital cushions. Specific planned CAPEX for infrastructure was not disclosed.

Credit Rating & Borrowing

The bank maintains a strong credit profile with a solvency level of 4.99% as of September 30, 2025. The overall cost of funds was 5.46% in H1 FY2026, which is higher than the Public Sector Bank average of 5.11%.

⚙️ Operational Drivers

Raw Materials

For Union Bank, 'raw materials' are deposits: CASA (32.6% of total deposits) and Term Deposits (67.4% of total deposits).

Import Sources

Not applicable for banking operations; resources are sourced domestically through a network of 8,655 branches.

Key Suppliers

Not applicable for banking operations; the 'suppliers' are the bank's retail and corporate depositors.

Capacity Expansion

Current capacity is 8,655 branches as of September 30, 2025. The bank is focusing on digital transformation and IT as an enabler to capitalize on customer service and staff ease of doing business.

Raw Material Costs

Cost of funds was 5.46% in H1 FY2026. The bank consciously reduced high-cost bulk deposits by 21.85 percentage points to manage interest costs.

Manufacturing Efficiency

Credit-to-Deposit (CD) ratio was 77% as of September 30, 2025, with a target range of 78.5% to 80%.

Logistics & Distribution

Operating expenses for H1 FY2026 were INR 13,684 Cr, up 10.37% YoY from INR 12,399 Cr.

📈 Strategic Growth

Expected Growth Rate

9-10%

Growth Strategy

The bank aims to achieve system-level growth by shifting focus to the RAM (Retail, Agriculture, MSME) sector, targeting a share of 58-59% of the loan book. It is also pivoting from bulk deposits to retail term deposits and CASA to improve margins while maintaining a CD ratio of 78.5% to 80%.

Products & Services

Housing loans (42.29% of retail book), MSME loans, Agriculture loans, Corporate loans, and Savings/Current accounts.

Brand Portfolio

Union Bank of India, Unionites (staff branding).

New Products/Services

Not specifically named, but the bank is focusing on 'granular' sustainable growth in the RAM sector.

Market Expansion

The bank is leveraging its 107-year history and 8,655 branches to maintain its position as a top-five Public Sector Bank.

Market Share & Ranking

Union Bank is one of the top five largest Public Sector Banks in India with total assets of INR 14,90,323 Cr.

🌍 External Factors

Industry Trends

The banking industry is seeing a shift toward digital banking and a transition toward the Expected Credit Loss (ECL) provisioning framework. System loan growth is currently around 11%, while Union Bank is trailing at 6% but aiming to converge by March 2026.

Competitive Landscape

Competes with other large PSBs; currently has a lower CASA ratio (33%) compared to the PSB average (36%).

Competitive Moat

The bank's moat is its extensive physical network of 8,655 branches and a 107-year-old brand heritage, providing a stable, low-cost resource base in rural and semi-urban areas.

Macro Economic Sensitivity

The bank's growth is tied to India's real GDP growth, projected at 6.7% for FY2026.

Consumer Behavior

Increasing shift toward digital banking; the bank is responding by enhancing its digital interface to reduce operating costs.

Geopolitical Risks

Geopolitical uncertainties are cited as a monitorable factor that could impact borrower repayment capacity and asset quality.

⚖️ Regulatory & Governance

Industry Regulations

The bank is preparing for the RBI's implementation of the Expected Credit Loss (ECL) framework, which will impact capital and provisioning requirements.

Environmental Compliance

The bank faces indirect environmental risks through its lending portfolio; it is monitoring climate transition risks for its borrowers.

Taxation Policy Impact

Tax provisions for H1 FY2026 were not explicitly totaled, but Q2 FY2026 saw a tax provision of INR 1,328 Cr.

Legal Contingencies

The bank monitors a 'vulnerable book' including SMA-1, SMA-2, and standard restructured accounts. Specific values for pending court cases were not disclosed.

⚠️ Risk Analysis

Key Uncertainties

The transition to the ECL framework is a major uncertainty for capital position. NIM compression due to rate cuts could impact profitability by 10-15% if spreads are not defended.