City Union Bank’s stock jumped over 9% in today’s trading, reaching a 19-month high after the bank released its strong June quarter results. The positive response from investors was driven by the bank’s reduced provisions.
In Q1 FY25, the bank’s net interest income rose to ₹545 crore from ₹523 crore in Q1 FY24. Non-interest income slightly increased to ₹192 crore from ₹191 crore. However, gross profit dropped to ₹373 crore from ₹414 crore year-over-year.
The bank reduced its provisions to ₹109 crore as of June 30, 2024, down from ₹187 crore last year. Profit after tax (PAT) grew to ₹264 crore in Q1 FY25, up from ₹227 crore in Q1 FY24.
Total deposits increased by 6% to ₹54,857 crore, with a CASA ratio of 30%. The cost of deposits rose to 5.72% from 5.36% due to policy rate hikes. Total advances went up by 10% to ₹46,548 crore, with a credit deposit ratio of 85%. The yield on advances increased to 9.59% from 9.53%.
The bank’s asset quality improved, with the gross NPA ratio dropping to 3.88% from 4.91%, and the net NPA ratio decreasing to 1.87% from 2.51%. The provision coverage ratio (PCR) including technical write-offs was 73%, and without technical write-offs, it was 53%.
As of June 30, 2024, the bank’s capital adequacy under RBI’s Basel III norms was 23.58%, and Tier-1 capital adequacy was 22.55%, both above regulatory requirements.
The stock opened today at ₹163 per share, up from the previous close of ₹159.80, and climbed to ₹174.80, gaining 9.4%. After a challenging period from December 2022 to March 2024, the stock has rebounded, achieving a 26% gain to date.
City Union Bank, established on October 31, 1904, in Kumbakonam, Tamil Nadu, focuses on lending to the MSME sector, retail, and wholesale trade, with a diverse asset profile. The bank also provides loans to the agricultural sector as part of its core strategy.
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