Summary
Union Bank of India - Q3 FY2025-26 Earnings Call Summary Wednesday, January 14, 2026 4:00 PM
Event Participants
Executives 6 Amresh Prasad (Executive Director), Asheesh Pandey (Managing Director & CEO), Avinash Prabhu (Chief Financial Officer), Nitesh Ranjan (Executive Director), Ramasubramanian S. (Executive Director), Sanjay Rudra (Executive Director)
Analysts 10 Akshay Badlani, Antariksha, Ashlesh Sonje, Ashok Ajmera, Bhavik Shah, Dixit Doshi, Gaurav Jani, Jai Mundhra, Jainam, Kunal Shah, Marukh Adajania, Parth Gutka, Siddharth Rajpurohit
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Deposits | ₹12.56 lakh crores | +3.36% YoY, +0.95% QoQ; Shed ₹40,000 crores of high-cost bulk deposits to optimize costs. |
| Gross Advances | ₹10.02 lakh crores | +7.13% YoY, +5.04% QoQ; First time crossing the ₹10 lakh crore milestone. |
| Net Interest Margin (NIM) | 2.76% | -15 bps YoY from 2.91%; Defended margins despite 125 bps repo rate cut through portfolio churning. |
| Net Profit | ₹5,017 crores | Record high; Driven by lower credit costs and strong RAM segment growth. |
| CASA Ratio | 34.5% (approx) | +140 bps QoQ; Significant improvement driven by “Ecosystem Banking” initiative. |
| GNPA | [Not explicitly stated] | Management noted a reduction to a “comfortable range” with slippages well-contained. |
| PCR | 95% | Maintained at high levels, reducing the need for incremental provisions. |
| Slippage Ratio | 0.72% (9M avg) | Dec-25 slippages at ₹1,800 crores; Fully offset by recoveries and upgradations. |
| Credit Cost | 0.26% (9M avg) | Remained at record lows (approx 10 bps for the quarter) due to high existing PCR. |
| CRAR / CET1 | 14.5% - 15% range | Capital position remains robust and well above regulatory requirements. |
Geographic & Segment Commentary
- RAM Segment: Grew by 11.50% overall, with Retail specifically rising 21.67% and Agri 19.75% YoY. The bank aims to maintain a 60:40 or 55:45 ratio between RAM and Corporate to optimize yields.
- Corporate Banking: Portfolio churned by ₹30,000 crores (reallocating from low-yield to high-yield loans); 95% of the book is rated BBB and above, with a focus on Private CAPEX and high-rated proposals.
- Gold Loans: Total portfolio reached ₹84,000 crores, with the Agri-gold component at ₹48,000 crores. Incremental yields are healthy at 8.85%-9.00% with LTVs maintained at 75%-85%.
Company-Specific & Strategic Commentary
- Project MUSKAAN: A bottom-up process simplification initiative targeting 300+ processes to improve employee productivity and customer experience while reducing costs.
- Ecosystem Banking: A newly created vertical with 1,600 dedicated staff focused on capturing end-to-end supply chain liquidity, contributing to the 140 bps QoQ CASA growth.
- Digital Transformation: 80% of liability accounts now opened via digital channels; ₹1,600 crore capital budget allocated for tech/cybersecurity infrastructure in FY26.
- Portfolio Shifting: Strategically contracted the Treasury book by ₹15,000 crores and exited ₹20,000 crores of IBPC to fund higher-yielding credit growth.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Loan Growth | Outperform Industry | Management expects Q4 FY26 growth to exceed Q3 levels based on a ₹26,000 crore disbursement pipeline. |
| NIM | 2.76% (Defend Level) | Management aims to defend 2.76% as deposit repricing lags asset-side rate cuts. |
| Credit Cost | 25-30 bps | Guidance for FY26 steady-state remains low due to 95% PCR and limited corporate slippages. |
| Branch Expansion | 275 New Branches | 75 to be opened by end of FY26, with 200 more planned for FY27 to bolster retail reach. |
Risks & Constraints
| Risk | Context |
|---|---|
| Interest Rate Lag | The immediate repricing of EBLR-linked loans (62% of book) against lagging deposit repricing remains a margin risk in a falling rate cycle. |
| ECL Transition | Potential transition impact estimated at ₹4,200-₹4,300 crores; while manageable via internal accruals, it may consume a portion of one-year profits. |
| Recovery Moderation | As the legacy stressed book shrinks, recoveries from written-off accounts are expected to moderate, potentially increasing net credit costs. |
Q&A Highlights
NIM Sustainability
- Question: Can the bank sustain 4% Q-o-Q loan growth and defend NIMs? (Jai Mundhra)
- Answer: Growth will be better in Q4 due to a ₹26,000 crore pipeline. Churning out ₹30,000 crore of low-yield assets into higher-yield RAM/Corp loans is the primary defense for NIM (Asheesh Pandey).
ECL Impact
- Question: What is the estimated impact of the draft ECL norms? (Marukh Adajania)
- Answer: Transition impact is roughly ₹4,200-₹4,300 crores. Current 95% PCR significantly bridges the gap. The bank may not need the 5-year spread-out dispensation given high profitability (Sanjay Rudra).
Deposit Mobilization
- Question: How will the bank fund 10%+ credit growth with only 3.8% 9M deposit growth? (Ashok Ajmera)
- Answer: The bank used excess liquidity from a ₹15,000 crore Treasury contraction and exited low-yield bulk deposits. Future growth will be funded by “Ecosystem Banking” CASA and Retail Term Deposits (Asheesh Pandey).
Asset Quality & Provisions
- Question: Why was standard asset provisioning so low this quarter? (Kunal Shah)
- Answer: The bank took front-loaded prudent provisions in Q1 and Q2. Given 95% PCR and no major corporate slippages (total slippage ₹1,800 cr), further standard provisioning wasn’t required (Avinash Prabhu).
Key Takeaway
Union Bank of India delivered a landmark quarter, crossing the ₹10 lakh crore advances milestone and achieving a record quarterly net profit of ₹5,017 crores. Despite a 125 bps reduction in the repo rate, the bank successfully defended its NIM at 2.76% through aggressive portfolio churning—reallocating ₹30,000 crores from low-yield corporate and treasury books into higher-yielding RAM segments. Asset quality remains top-tier with a 95% PCR and minimal slippages (credit cost at 26 bps for 9M). Strategically, the bank is pivoting toward “Ecosystem Banking” to bolster its CASA (up 140 bps QoQ) and is investing ₹1,600 crores in digital infrastructure. Management is confident in outperforming industry credit growth in Q4 FY26, backed by a robust disbursement pipeline, while maintaining a cautious but stable outlook on margins as deposit repricing catches up.
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