Union Bank of India Stock Slides 3.73% Despite Strong Retail Loan Growth in Q1 FY26
By Shishta Dutta | Published at: Jul 9, 2025 11:11 AM IST
Mumbai, July 9, 2025: Shares of Union Bank of India saw a notable drop of 3.73% to ₹144.65 in early trading on Tuesday. This decline occurred despite the public sector lender releasing provisional figures for the June quarter of FY26, which showed strong year-on-year growth in its retail and RAM (Retail, Agriculture, and MSME) loan segments.
Street Unimpressed by Q1 FY26 Provisional Metrics
Even with domestic retail advances jumping by 25.60% year-on-year and RAM loans rising by 10.31% year-on-year, the stock fell sharply from its previous closing price of ₹150.25. The market’s focus appears to be on the sequential (quarter-on-quarter) contraction in the bank’s total business and deposits.
Key Price and Market Snapshot (as of 9:25 AM IST, July 9, 2025)
| Stock Price | % Change | VWAP | 52W High | 52W Low | Volume |
|---|---|---|---|---|---|
| ₹144.65 | -3.73% | ₹143.88 | ₹158.65 | ₹100.81 | 83.82 lakh |
- Total Market Cap: ₹1,10,526.98 Cr
- Free Float Market Cap: ₹27,909.07 Cr
- Delivery %: 43.78%
- Adjusted P/E: 6.40
- Index Inclusion: NIFTY MIDCAP 100
- Buy/Sell Quantity: 20.21 lakh vs 17.61 lakh
Business Metrics: Sequential Weakness Persists
Union Bank’s provisional business figures for Q1 FY26, released before their official review, indicate a mixed performance. While loan growth remains positive year-on-year, there’s a sequential contraction in overall deposits and global business volumes.
Q1 FY26 Operational Highlights (₹ in crore)
| Metric | Q1 FY25 | Q4 FY25 | Q1 FY26 | QoQ (%) | YoY (%) |
|---|---|---|---|---|---|
| Total Business (Global) | 21,08,762 | 22,55,141 | 22,14,480 | -1.80% | 5.01% |
| Global Deposits | 11,96,548 | 12,72,247 | 12,39,936 | -2.54% | 3.63% |
| Domestic CASA Deposits | 3,99,438 | 4,26,242 | 4,03,096 | -5.43% | 0.92% |
| Global Gross Advances | 9,12,214 | 9,82,894 | 9,74,544 | -0.85% | 6.83% |
| Domestic Retail Advances | 1,82,316 | 2,16,777 | 2,28,980 | +5.63% | +25.60% |
| Domestic RAM Advances | 4,94,029 | 5,31,679 | 5,44,986 | +2.50% | +10.31% |
Note: Provisional data subject to limited review by statutory auditors.
Why Investors are Concerned?
Despite the impressive growth in retail credit, investor sentiment remains cautious due to several factors:
- Decline in CASA Deposits: The sharp 5.43% quarter-on-quarter decline in Domestic CASA (Current Account Savings Account) deposits is a major concern. CASA deposits are a bank’s cheapest source of funds, as they pay very low or no interest. A decrease in CASA typically means the bank will have to rely more on costlier term deposits, which can put pressure on its Net Interest Margin (NIM) – a key measure of profitability.
- Sequential Contraction in Business & Deposits: The overall sequential shrinkage in both total deposits and global business volumes suggests a potential slowdown in the bank’s growth momentum. This could indicate tougher competition for deposits or the impact of interest rate changes.
- Lack of Key Profitability Disclosures: The provisional data did not include crucial figures like net profit or Net Interest Margin (NIM). Without these, the market lacks a complete picture of the bank’s financial health and profitability, leading to uncertainty.
What’s Ahead?
Union Bank’s strong retail loan growth signals underlying demand, but market focus will stay on profitability metrics in the upcoming Q1 FY26 results. Investors are likely to watch for recovery in CASA deposits and clarity on Net Interest Margin (NIM) trends, which are vital for sustaining earnings. If sequential deposit and business growth continue to lag, concerns over funding costs and pressure on margins may persist. However, any rebound in deposit mobilisation or improved guidance from management could help restore investor confidence in the coming quarters.
REF: https://nsearchives.nseindia.com/corporate/UNIONBANK_08072025223237_30062025_Provisional_Financial_Results_-_Revised.pdf
Disclaimer: At HDFC SKY, we take utmost care and due diligence in curating and presenting news and market-related content. However, inadvertent errors or omissions may occasionally occur.
If you have any concerns, questions, or wish to point out any discrepancies in our content, please feel free to write to us at content@hdfcsec.com
Please note that the information shared is intended solely for informational purposes and does not make any investment recommendations
