City Union Bank (CUB) Q2 24/25 earnings summary

Executive summary

• Celebrating 120 years of operations, the bank reported strong Q2 FY25 results with double-digit credit growth and improved profitability, driven by MSME and gold loan segments, and a granular, highly collateralized asset profile.

• Deposits grew 9% year-over-year to INR 52,369 crore (INR 573,691 Mn), and advances rose 12% to INR 48,122 crore (INR 487,220 Mn) in Q2 FY25.

• Net profit for Q2 FY25 was INR 2,852 Mn (₹28,518 lakhs), up 2% year-over-year; H1 FY25 net profit reached INR 5,497 Mn, up 8% year-over-year.

• Digital transformation and process improvements have reduced MSME loan processing times and expanded digital product offerings, including UPI Circle and ONDC for MSMEs.

• Pan-India presence with 812 branches, predominantly in South India.

Financial highlights

• Net interest income for Q2 FY25 rose 10% year-over-year to INR 1,434 crore (INR 5,825 Mn); other income increased 24% to INR 2,263 Mn.

• Net interest margin improved to 3.67% in Q2 FY25; cost-to-income ratio declined to 47.06% from 49.34% in Q1.

• Gross NPA reduced to 3.54% as of September 2024, down from 4.66% a year ago; Net NPA at 1.62%.

• Provision coverage ratio at 75% (including technical write-off); CRAR (Basel III) at 22.98% with Tier I at 21.98%.

• Return on assets (annualized) at 1.59% for Q2 FY25; ROE at 12.93%.

Outlook and guidance

• Confident of achieving or exceeding industry-level credit growth by year-end, with incremental growth expected from new secured retail products.

• Continued focus on MSME and retail lending, leveraging digital initiatives for growth.

• Net NPA targeted between 1% and 1.25% by year-end; provision coverage ratio may be increased.

• Margins, cost-to-income ratio, and NPA slippages expected to remain stable.

• Emphasis on maintaining asset quality and capital adequacy.