City Union Bank shares rally 7% after Q2 net profit grows 27% YoY to Rs 416 Crore

Why did Jefferies and Nomura raise target prices?The operating expenses were recorded at Rs 562 crore in Q2FY27 compared to Rs 455 crore in the same time period a year ago. The Gross Profit for Q2 FY 27 stood at Rs 661 crore as against Rs 471 crore in Q2 FY 26 with a growth of 40%.The bank made a provision for bad debts of Rs 120 crore in Q2 as against Rs 110 crore in the corresponding period last year.

The bank has provided Rs 27 crore towards Standard Assets, and a contingent provision of Rs 50 crore has been made during this quarter.Live EventsTotal deposits rose 21% to Rs 83,893 crore in Q2FY27 from Rs 69,486 crore in the corresponding period last year. CASA portion stood at 27% of total deposits. Cost of deposits fell to 5.56% in Q2 FY27 from 5.71% in Q2 FY26.The bank also mentioned that it had anticipated higher cost, easing of liquidity by regulatory measures such as FCNR(B) has helped to reduce the cost of deposits this year.

The total advances increased by 26% for Q2 FY27 to Rs 72,442 crore from Rs 57,561 crore in Q2 FY26. The average credit deposit ratio stood at 86%.The Gross NPA for Q2 FY27 was reduced to 1.44% from 2.42% in the corresponding quarter last financial year, indicating a 98 basis points reduction. Net NPA decreased by 42 basis points to 0.48% from 0.90% for the same period. The provision coverage ratio (PCR) as of the September quarter is at 82% (including T/W) and 67% (excluding T/W).Return on assets for Q2 FY27 is 1.62% as against 1.59% in the same quarter last year and the bank said that ROA is over and above its long term level of 1.50 since Q1 FY25.

The bank’s capital adequacy in the said quarter as per Reserve Bank of India (RBI) guidelines on Basel III norms is 21.26% and Tier-1 capital adequacy was 20.43%, which is well above regulatory requirements.Financial Performance in H1 FY27For the half year ended September 2026, profit after tax (PAT) rose 26% year-on-year to Rs 798 crore from Rs 635 crore. Operating profit increased to Rs 1,241 crore from Rs 922 crore in the corresponding period last year, while net interest income (NII) grew 31% in H1 FY27.

Why Nomura, other brokerages remain bullish?Return on equity improved to 14.78% in H1 FY27 from 13.15% a year earlier. Non-interest income rose 18% year-on-year to Rs 594 crore from Rs 503 crore.City Union Bank share price movementCity Union Bank shares have gained 3.67% over the past month and 2.79% so far this calendar year. The stock has risen 25.81% over the past year and gained 122.68% over three years.

Over five years, however, it has gained 76.66%.Disclosure: This article has been written by Surbhi Khanna, who is not a SEBI-registered Research Analyst or an investment advisor . Surbhi Khanna does not hold any financial interest in Economic Times as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution.

They should not be construed as the views or recommendations of the EconomicTimes Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment.(You can now subscribe to our ETMarkets WhatsApp channel)