City Union Bank Q2 FY27: Standalone PAT up 27% YoY to ₹416 Cr, asset quality improves

City Union Bank's standalone net profit for Q2 FY27 rose 26.6% year-on-year to ₹415.9 Cr (₹328.6 Cr in Q2 FY26) and 8.7% sequentially (₹382.6 Cr in Q1 FY27, itself a record quarter) — profit growth that essentially tracked the 26.6% YoY rise in interest earned (₹2,092.3 Cr), so this isn't a margin-engineered beat. Against our pre-result preview, the bank cleared every expectation we flagged going in: net interest income of ₹872.8 Cr came in above the ~₹820-850 Cr expected range, advances grew 26.6% YoY to ₹71,743 Cr versus an expected 20-22%, deposits grew 20.7% YoY to ₹83,893 Cr versus an expected 18-20%, and Gross NPA improved to 1.44% versus an expected 1.6-1.9%. No Q2-specific brokerage consensus PAT figure was found in a web search, but full-year FY27 analyst PAT estimates of roughly ₹1,556-1,602 Cr (Anand Rathi, ICICI Direct) imply a run-rate of ~₹390-400 Cr/quarter; H1 FY27 PAT of ₹798.5 Cr is tracking at or slightly ahead of that pace.

On margins, the picture is two-sided. Operating margin expanded to 31.1% of interest earned from 28.5% a year ago and 29.3% last quarter, aided by cost discipline — cost-to-income came in near 46.0%, better than management's own 47-48% guided band. But net margin held roughly flat at 17.0% (17.2% both a year ago and last quarter), because provisions (other than tax) of ₹120 Cr were elevated — stripping out the ₹50 Cr discretionary buffer, underlying credit cost of roughly ₹70 Cr annualises to ~0.39% of advances, right in line with management's 0.40% steady-state guidance, but the buffer itself pulled reported net margin down. Annualised Return on Assets was 1.62%, inside the 1.55-1.65% FY27 band management guided to on the Q1 call (cut at the time from 1.65-1.67%) — so this print meets, rather than beats, that specific guidance. Net Interest Margin, which management had guided to 3.65-3.70% (down from Q1's 3.78%) and flagged as under pressure from deposit costs, is not separately disclosed in this statement, so that guidance line can't be directly checked this quarter.

The stock went into the print at ₹228.52, up 1.3% over the past month of trading.

For context: this is the highest quarterly PAT in the last 6 quarters on our records; PAT has now risen for 5 consecutive quarters; revenue is at a 6-quarter high.

Basic EPS ₹4.20 (not annualised) vs ₹3.32 YoY, ₹3.86 QoQ

Asset quality kept improving — Gross NPA fell to 1.44% from 1.73% last quarter and 2.42% a year ago, Net NPA to 0.48% from 0.90% YoY, and the Provision Coverage Ratio stands at 82% including technical write-offs. Capital Adequacy Ratio (Basel III) jumped sharply to 27.26% from 21.73% last quarter and 21.68% a year ago — a ~550bps sequential move the notes don't explain (paid-up capital was essentially unchanged from Q1), pointing to a capital infusion or risk-weighted-asset reduction worth tracking. On the ₹208.91 Cr GST/tax demand order the bank received on October 14, 2026 (flagged as a pre-result watch item), this filing shows no distinct provision line for it — Note 3 only mentions a change in capitalisation policy for fixed assets tied to ITC reversed under GST Sec 17(4), so the demand's financial treatment remains unresolved in this result. No management press release or MD commentary was available in the records to cross-check against the numbers.