City Union Bank Q2 Results Review


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City Union Bank Ltd.’s net profit grew by 51.8% YoY to Rs 2.7 billion, led by margin expansion and lower provisions. Balance sheet growth was moderate as the credit book increased by 12.9% YoY while deposits grew by 7.7% YoY.

On the operational front, the bank reported healthy numbers, driven by margin expansion (14 bps QoQ; 6 bps YoY), contained operating costs and lower provisions on the back of improving asset quality.

Treasury and other income declined, impacting net revenue growth. Overall asset quality continued to improve on a sequential basis, driven by healthy recoveries and lower slippages.

We expect asset quality to likely improve further on the back of higher TW recoveries. Balance sheet growth remains below system growth, but the management expects growth to pick up pace with most of it likely to be back-ended and reiterated credit growth of ~15-18% for FY23.

City Union Bank’s liquidity and capitalisation position remains robust.

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