Union Bank Q1: consolidated PAT up 27% YoY to ₹5,642 Cr, beats street as provisions ease
PAT +27.4% YoY · revenue +1.2% · margins expanding · beat vs street
₹27,427.1 Cr
+1.2% YoY
₹5,641.52 Cr
+27.4% YoY
17.27%
+4.5pp YoY
₹7.39
Union Bank of India opened FY27 with a margin-led profit beat. Consolidated net profit for Q1 FY27 came in at ₹5,642 Cr, up 27.4% year-on-year (from ₹4,428 Cr) and 2.5% sequentially, with consolidated EPS of ₹7.39 versus ₹5.80 a year ago; the standalone bank earned ₹5,332 Cr, +29.6% YoY. This comfortably beat the street — Motilal Oswal had modelled standalone PAT of about ₹4,485 Cr (+9% YoY) and operating profit near ₹7,247 Cr, and the actuals (₹5,332 Cr PAT, ₹8,003 Cr operating profit) ran roughly 19% and 10% ahead respectively.
Q1 FY-2027 vs prior quarters
The quality of the print is entirely in the P&L below the topline. Interest earned was near-flat at ₹27,427 Cr (consol, +1.2% YoY) and total income rose just 2.2% to ₹32,660 Cr, so revenue was not the story. Net interest income (standalone) grew ~10.1% to ₹10,037 Cr and operating profit rose 15.9% to ₹8,040 Cr (consol), but the real lever was provisions: standalone provisions & contingencies fell 41% to ₹979 Cr from ₹1,665 Cr a year ago as asset quality improved — gross NPA down to 2.65% (from 3.52%), net NPA 0.47%, and provision coverage a strong 95.05%. That combination pushed the net profit margin to 17.27% from 13.85% a year earlier and lifted annualised RoA to 1.36% (from 1.11%).
The stock went into the print at ₹171.17, down 0.1% 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 3 consecutive quarters.
Management guides for 13-14% credit growth in FY27, aiming to perform slightly better than the industry average. They intend to defend the current Net Interest Margin (NIM) of ~2.64% with potential for improvement, driven by a strategic shift towards higher CASA and retail term deposits. Consequently, Net Interest Inco
— This quarter: met
Against management's own FY27 guidance the quarter is on track: advances grew 13.3% YoY to ₹10.72 lakh Cr, squarely inside the 13-14% credit-growth guide, and the implied credit cost is running well below the ~1% guidance. The soft spot is the liability side — global deposits rose only ~3.5% YoY, and it was exactly this weak deposit and business-growth print in the July-2 quarterly update that had sent the stock down ~7% before results. The management's guidance to defend NIM at ~2.64% via a CASA/retail-term-deposit shift is the swing factor here, and the street already pencils in a small ~4 bps QoQ NIM dip. Capital remains ample (CRAR 19.15% consol, CET-1 17.08%).
What to watch
W1
NIM defense: management guides to hold ~2.64% NIM; street already models a ~4 bps QoQ dip — watch the Q2 print given the deposit-cost pressure.
W2
Deposit mobilisation: deposits grew only ~3.5% YoY vs advances +13.3%; CASA/retail-term-deposit traction is needed to fund the 13-14% loan-growth guide.
W3
Credit cost: Q1 provisions imply a run-rate well under the ~1% FY27 guidance; watch whether the ₹800 Cr contingency buffer keeps building or gets released into profit.
Bank-format P&L; converted from ₹ Lakh (÷100). No exceptional items either period. Consolidated PAT ₹5,641.52 Cr = ordinary PAT ₹5,368.17 Cr + ₹273.35 Cr associate profit share (Andhra Pradesh Grameena Bank); nil minority interest. Records' year-ago consol netProfit (₹4,136.57 Cr) is the pre-associate 'H' line — true comparable is ₹4,427.94 Cr (EPS-consistent 5.80→7.39), so consolidated YoY is +27.4%, not +36%. revenueFromOperations = Interest Earned; totalExpenses = totalIncome−PBT (includes ₹979 Cr provisions). Non-P&L items: ₹100 Cr contingency-provision top-up (buffer now ₹800 Cr), ₹1,701.40 Cr IFR transferred to general reserve, ₹850 Cr Tier-II bond called.
Profit beats but growth lags—NIM shines, revenue stumbles
The verdict, the claims that held up, the sharpest analyst exchanges, and the risks — the earnings call, decoded from the transcript.
Hold
confidence 6/10
Grade B
NIM target beaten (2.80% vs 2.64%); credit growth 13-14% at risk vs industry 18-19%. Profit strong but efficiency-driven, not growth.
Optimistic
next 1–2 quarters
Optimistic
multi-year
UBI delivered profit growth (+29.8% YoY) and NIM expansion (2.80% vs 2.64% defend guidance) via cost efficiency, but revenue flatlined YoY and credit growth lagged industry by 5 ppts, signalling near-term headwinds. ECL ₹6,000 Cr provision overhang will compress profits Q2-Q4. Long-term foundation solid (CASA buildout, ₹1L+ pipeline) but execution risk on deposit mobilization and guidance credibility is elevated.
₹27427.1 Cr
Revenue · +-0.2% YoY₹5368.2 Cr
Reported PAT · +29.8% YoYExpanding
Margins · vs guidance: MixedDid the claims hold up?
Highest ever profit, highest ever dividend
METPAT ₹5,368 Cr, YoY +29.8%, but QoQ +0.6% flat; profit drove by efficiency not growth
NIM improved to 2.80% from prior 2.64% defend guidance
METNIM reached 2.80%, deposit cost -18 bps. Exceeded guidance.
Good credit growth clocked
OVERSTATEDQ4 was 7%, Q1 'slightly sluggish'; industry growing 18-19%, bank at 13-14%. Lagging sector.
Robust CASA + RTD buildout: ₹41,000 Cr average
METCASA ₹24,000 Cr avg + RTD ₹17,000 Cr avg confirmed. Shed ₹18-20K Cr bulk deliberately.
Revenue flat, highest operating profit ₹8,003 Cr
METRevenue -0.2% YoY (flat/decline). Profit growth from cost-to-income improvement (-500 bps), not topline.
Asset quality best-in-class: SMA ₹2,800 Cr, 1K lower than March
PartialSMA confirmed ₹2,800 Cr. But NPA provision jumped to ₹2,020 Cr from ₹420 Cr QoQ. SMA-2 +₹350 Cr.
MSME stress contained, ECLGS ₹10,000 Cr disbursed
METECLGS ₹12,000 Cr sanctioned, ₹10,000 Cr disbursed confirmed. MSME stress acknowledged: 'it is and going to be there' but low-value tickets govt-covered.
Earnings quality
What changed since the last call
NIM guidance upgraded from defend to improve
UpgradePrior: Defend 2.64% NIM. Achieved: 2.80% (+16 bps). Deposit cost -18 bps helped. Strategic CASA/RTD shift working.
Credit growth pacing slower than industry
DowngradePrior guidance: 13-14% FY27. Actual: Q1 'sluggish', industry at 18-19%, bank lagging 5 ppts. Q4 was 7% (low base), Q1 remains weak.
Asset quality provision stance more proactive
UpgradeECL overhang ₹6,000 Cr remaining. Bank adding ₹800 Cr extra provision (₹700 Q4 + ₹100 Q1) pre-ECL regulation (Apr 27). Preemptive cleanup.
MSME/Agri stress admission & mitigation strategy
NeutralMgmt acknowledged MSME stress ('it is and going to be there'). New: 140 regional MSME meets, granular ticket-level risk profiling, ECLGS/RBI relief matching. Proactive vs prior passive.
Deposit trajectory: bulk shed, CASA/RTD build
NeutralPrior Q4: Building CASA/RTD. Q1 FY27: Shed ₹18-20K Cr bulk (27% → 19% of deposits). Intentional de-risking; efficiency trade-off vs growth.
The Q&A
Moderate pushback from analysts on deposit gap (Mahrukh/Ajmera); credit growth lagging (Ajmera/Jai); recovery decline (Ajmera). Mgmt held firm on capital adequacy (12% buffer from 74%→86% CD ratio), pipeline sufficiency (₹1L+ undrawn), MSME mitigation. Defensive on ECLGS (lengthy rebuttal to Ajmera on CC impact), deflecting on near-term deposit/growth headwinds.
Deposit growth gap — Mahrukh Adajania, Tara Capital
PartialCD ratio 74% (Mar) → 86% (Jun), ₹1L Cr capital headroom. CASA/RTD priority. FCNR ₹1.5-2B by Sep (~₹20K Cr). Bulk deposit ratio 19% target over 1-3 yrs.
Business growth, credit lagging — Ashok Ajmera, Ajcon Global
PartialQ4 credit growth 7% annualized high; ₹1L+ corporate pipeline sanctioned. MSME/Agri/Retail schemes targeting 18-20% (vs 11-14% industry). Deposit will follow credit.
Recovery, NPA provision, MSME stress — Ashok Ajmera, Ajcon Global
AnsweredMar had Supreme Court recovery (bulk, one-time). Q1 recovery ₹750 Cr normal; NCLT dried up, SARFAESI/OTS ongoing. MSME stress on low-ticket govt-covered. 140 regional meets, proactive relief matching.
Provisioning, write-off, balance sheet cleanup — Kunal Shah, Citigroup
AnsweredWrite-off flat Q1 vs Q1 prior-yr. Slippages flat QoQ. Tax planning + balance sheet cleanup opportunistic when profits highest. Ratios best-in-class justify proactive stance.
Cost of funds, deposit cost reduction — Kunal Shah, Citigroup
AnsweredTier 2 bonds at higher cost (9%), ₹850 Cr matured this Q. ₹2,500 Cr new @ 8.7% blended. Will exercise call options going forward to reduce.
PSLC income surge, ECL provision estimate — Dixit Doshi, Whitestone Financial
AnsweredPSLC ₹217 Cr this Q from agriculture/SMF excess sold. ECL total ₹11,300 Cr; already carrying ₹5,500 Cr additional; remaining ~₹6,000 Cr over remaining quarters.
ECL annual run-rate impact, MSME/Agri asset quality — Anand Dama, Nuvama
PartialECL one-time ₹11,300 Cr + ongoing monthly stages (positive/negative by portfolio). Agri Pan-India spread; Maharashtra impact manageable (date fixed, provisions done). MSME 140 meets done; no negative visible yet.
Overall credit growth guidance, IBPC stance — Jai Mundhra, ICICI Securities
AnsweredIndustry +1% minimum guide; domestically 57-43 split maintained. ₹1L+ corporate pipeline. Zero IBPC, selling IBPC instead. Underwrote ₹70K+ Cr corporate in 9 months.
Tax refund income, PSLC outlook, gold loan destocking — Antariksha Banerjee, ICICI Prudential
AnsweredTax refund lumpy; treasury income down ₹1,439 Cr → ₹630-640 Cr. PSLC depends on agri/SMF growth. Gold loan de-grown ₹2.5-3K Cr (compliance work); SMF growth independent.
NIM drivers, domestic yield, AFS reserve — Param Subramaniam, Investec
PartialDomestic yield 8.01%; portfolio rebalance to higher-yield segments. Foreign branches syndicated, down-selling 100-140 bps. NIM will improve via CASA/RTD/lower funding costs. AFS reserve -₹345 Cr (vs -₹800 Cr prior).
LCR benefit from new guidelines, CD ratio comfort — Nitin Aggarwal, Motilal Oswal
AnsweredLCR benefit ~2.5-3% (~₹4.5K Cr) from society/trust AOPs (100%→40% run-off) + decreases. CD ratio 74% (Mar)→86% (Jun); good comfortable range. Will not exceed. Deposit buildout via CASA/RTD first.
Guidance
FY27 credit growth 13-14% (industry +1% minimum)
MediumQ1 'slightly sluggish'; Q4 was 7%. Industry at 18-19% (lagging 5 ppts). ₹1L+ corporate pipeline sanction; MSME/Agri/Retail schemes aim 18-20%.
NIM defend 2.64%, aspire to improve; now 2.80%
HighAchieved 2.80% (beat by 16 bps). Deposit cost -18 bps, domestic yield rebalance ongoing. Stated 'defending is for sure, improving is aspiration'.
Cost-to-income reduction (500 bps achieved)
HighAlready down 500 bps. Project Muskaan, ecosystem banking vertical (1,200 people, separate sourcing) bearing fruit.
FCNR mobilization ₹1.5-2B by Sep (~₹20,000 Cr INR equiv)
Medium106M already done; no leverage yet but in talks. OFCB ₹200-300M planned. Scheme runs through Sept 2026.
Risks the call surfaced
Credit growth lagging
MediumQ1 'sluggish', industry 18-19% vs bank 13-14%. Credit growth guidance at risk. Deposit gap (CD 86%) constrains disbursement even with ₹1L+ pipeline.
Asset quality deterioration
MediumNPA provision spiked ₹2,020 Cr (vs ₹420 Cr Q4). SMA-2 +₹350 Cr. Recovery halved vs Mar (one-time Mar event). MSME stress 'ongoing'; Agri exposed to Maharashtra farm waiver.
ECL provision overhang
HighECL total requirement ₹11,300 Cr; ₹5,500 Cr already provided. Remaining ~₹6,000 Cr to absorb Q2-Q4 FY27. Will suppress reported PAT 15-20% if phased Q2-Q4. CRAR impact: 18.10% (Mar 31) → 17.54% (if absorbed FY27).
Revenue stagnation
MediumRevenue -0.2% YoY (flat/decline). Treasury income halved from ₹1.4K Cr to ₹630K Cr. NIM improvement masks underlying topline weakness. Profit growth from cost-cuts, not organic expansion.
Deposit mobilization risk
MediumCD ratio 86% (up 12 ppts YoY). Bulk deposit shed ₹18-20K Cr deliberate; lower-cost CASA/RTD insufficient to fully replace. Deposit growth needed to sustain 13-14% credit growth but lagging (guidance deposit growth ~11% vs credit 13-14%).
Management
Score 7/10. Detailed, data-driven responses; transparent on challenges (MSME stress, recovery decline, ECL overhang). Lengthy on some topics (ECLGS rebuttal 3 pages). Deflects on near-term growth shortfalls by citing 'Q1 typically sluggish'. Met NIM guidance (2.80% vs 2.64%), cost-to-income beat (-500 bps), profit growth +29.8%. Credit growth lagging guidance (13-14% target vs 18-19% industry). Revenue flat YoY. On track for ECL provisioning (₹800 Cr preemptive).
1 · Q2-Q4 FY27
FCNR/OFCB mobilization ₹1.5-2B by Sep; deposit growth pickup to ease CD ratio (86%, up 12 ppts)
2 · Q2-Q4 FY27
ECL phase-in ₹6,000 Cr provision will suppress reported PAT but strengthen capital/credit risk profile
3 · FY27 (full year)
Credit pipeline ₹1L+ Cr disbursement; MSME/Agri/Retail schemes (18-20% growth target) vs current 13-14% guidance
Long-term foundation solid (CASA buildout, ₹1L+ pipeline) but execution risk on deposit mobilization and guidance credibility is elevated.
Union Bank Q1: consolidated PAT up 27% YoY to ₹5,642 Cr, beats street as provisions ease
PAT +27.4% YoY · revenue +1.2% · margins expanding · beat vs street
₹27,427.1 Cr
+1.2% YoY
₹5,641.52 Cr
+27.4% YoY
17.27%
+4.5pp YoY
₹7.39
Union Bank of India opened FY27 with a margin-led profit beat. Consolidated net profit for Q1 FY27 came in at ₹5,642 Cr, up 27.4% year-on-year (from ₹4,428 Cr) and 2.5% sequentially, with consolidated EPS of ₹7.39 versus ₹5.80 a year ago; the standalone bank earned ₹5,332 Cr, +29.6% YoY. This comfortably beat the street — Motilal Oswal had modelled standalone PAT of about ₹4,485 Cr (+9% YoY) and operating profit near ₹7,247 Cr, and the actuals (₹5,332 Cr PAT, ₹8,003 Cr operating profit) ran roughly 19% and 10% ahead respectively.
Q1 FY-2027 vs prior quarters
The quality of the print is entirely in the P&L below the topline. Interest earned was near-flat at ₹27,427 Cr (consol, +1.2% YoY) and total income rose just 2.2% to ₹32,660 Cr, so revenue was not the story. Net interest income (standalone) grew ~10.1% to ₹10,037 Cr and operating profit rose 15.9% to ₹8,040 Cr (consol), but the real lever was provisions: standalone provisions & contingencies fell 41% to ₹979 Cr from ₹1,665 Cr a year ago as asset quality improved — gross NPA down to 2.65% (from 3.52%), net NPA 0.47%, and provision coverage a strong 95.05%. That combination pushed the net profit margin to 17.27% from 13.85% a year earlier and lifted annualised RoA to 1.36% (from 1.11%).
The stock went into the print at ₹171.17, down 0.1% 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 3 consecutive quarters.
Management guides for 13-14% credit growth in FY27, aiming to perform slightly better than the industry average. They intend to defend the current Net Interest Margin (NIM) of ~2.64% with potential for improvement, driven by a strategic shift towards higher CASA and retail term deposits. Consequently, Net Interest Inco
— This quarter: met
Against management's own FY27 guidance the quarter is on track: advances grew 13.3% YoY to ₹10.72 lakh Cr, squarely inside the 13-14% credit-growth guide, and the implied credit cost is running well below the ~1% guidance. The soft spot is the liability side — global deposits rose only ~3.5% YoY, and it was exactly this weak deposit and business-growth print in the July-2 quarterly update that had sent the stock down ~7% before results. The management's guidance to defend NIM at ~2.64% via a CASA/retail-term-deposit shift is the swing factor here, and the street already pencils in a small ~4 bps QoQ NIM dip. Capital remains ample (CRAR 19.15% consol, CET-1 17.08%).
What to watch
W1
NIM defense: management guides to hold ~2.64% NIM; street already models a ~4 bps QoQ dip — watch the Q2 print given the deposit-cost pressure.
W2
Deposit mobilisation: deposits grew only ~3.5% YoY vs advances +13.3%; CASA/retail-term-deposit traction is needed to fund the 13-14% loan-growth guide.
W3
Credit cost: Q1 provisions imply a run-rate well under the ~1% FY27 guidance; watch whether the ₹800 Cr contingency buffer keeps building or gets released into profit.
Bank-format P&L; converted from ₹ Lakh (÷100). No exceptional items either period. Consolidated PAT ₹5,641.52 Cr = ordinary PAT ₹5,368.17 Cr + ₹273.35 Cr associate profit share (Andhra Pradesh Grameena Bank); nil minority interest. Records' year-ago consol netProfit (₹4,136.57 Cr) is the pre-associate 'H' line — true comparable is ₹4,427.94 Cr (EPS-consistent 5.80→7.39), so consolidated YoY is +27.4%, not +36%. revenueFromOperations = Interest Earned; totalExpenses = totalIncome−PBT (includes ₹979 Cr provisions). Non-P&L items: ₹100 Cr contingency-provision top-up (buffer now ₹800 Cr), ₹1,701.40 Cr IFR transferred to general reserve, ₹850 Cr Tier-II bond called.