Union Bank of India has announced a strong performance for the first quarter of the financial year in its first business update. The public sector lending major shared that its total business has grown manifold and has touched a milestone of ₹23.79 lakh crore for its cumulative business across the globe in the June quarter. This operational performance reflects the bank’s continued credit momentum and position in an evolving and competitive domestic banking environment.

Steady performance and internal credit traction

The new financial figures show a definite progress rate when compared with the same period in the previous fiscal year. The global business of the state-owned lender is close to growing by 7.5% year-on-year to ₹23.79 lakh crore, as revealed in the regulatory exchange disclosures filed by the entity. 

The global business matrix of the bank was ₹22.14 lakh crore in the same quarter of the last financial year, reflecting viable growth in the bank’s asset and liability base. The rise in business over the globe was, though, well supported by a stronger increase in the volume of gross advances. 

The bank’s gross advances grew by 12.50% year-on-year to reach ₹10.96 lakh crore for the quarter ending June 30. This shows a consistent credit off-take across the core commercial lending segments and was a significant improvement from gross advances of ₹9.74 lakh crore in the corresponding period of the earlier fiscal year. During the quarter-on-quarter period, total gross advances likewise experienced positive sequential growth of 1.64% from the previous quarter of March.

The domestic lending side tracks this broad-based credit momentum fairly closely. On the bottom line, public sector enterprises (PSE) domestic advances rose 13.11% year-over-year to ₹10.61 lakh crore in the review period, up from ₹9.38 lakh crore in the year-ago period. 

Domestic growth increased 1.94%. The internal credit traction was supported by the bank’s emphasis on the critical retail, agriculture and micro, small and medium enterprises (RAM) portfolio; the domestic RAM advances grew by 11.56% on an annual basis and an increase of 1.61% sequentially.

Stock market response and improving credit-to-deposit ratios

On the liabilities side of the balance sheet, the bank’s building deposits grew in steps but at a slightly slower rate than advances. Year-on-year increase in total deposits was 3.49%. 

The performance of the bank’s key low-cost deposit instrument, its CASA portfolio, was markedly better, with the product increasing by 11.72% year on year. Total deposits and CASA metrics also slipped slightly by 1.80% and 2.10%, respectively, in sequential comparison, in line with a wider industry deposit tightening trend.

The structural Credit-to-Deposit (C/D) ratio of the bank increased significantly because of the quicker growth of credits compared with that of deposits. The year-on-year C/D ratio is 83.38%, significantly higher compared to 76.24% in the last year’s June quarter, and this includes domestic operations and excludes bank deposits. This ratio increased 298 basis points over the prior quarter to 80.40%. 

The C/D ratio inclusive of domestic deposits and bank deposits rose by 704 basis points annually to 82.72%. The absolute value of global business also experienced a minor contraction at the annual level, whereas it expanded in terms of parameters at the sequential level. 

Global business total at ₹23.79 lakh crore for the current quarter of October has decreased by a marginal 0.24% on a quarter-on-quarter basis from the previous quarter ended in March, which was at ₹23.85 lakh crore. This modest decline was strongly associated with the moderate sequential compression found in the overall deposit base for the opening three months of the new financial cycle.

Investor sentiment on the stock exchanges saw a short window of profit-taking after the regulatory update was released after market hours. Union Bank of India shares declined around 5% during the intra-day trading of the stocks, hitting a daily low of ₹161.65 per share. The market prices are volatile over short periods, but the stock has generated consistent long-term returns to shareholders, which rose by 7.69% in the last year and close to 20% in the two years.

Conclusion

Union Bank of India’s latest operational figures showcase a year of consistent growth and structural evolution. The bank’s achievement of a global business size of ₹23.79 lakh crore and a 12.50% increase in gross advances helps establish its capacity to sustain a robust credit provision in major economic sectors.

The expansion of the CASA base and the use of a variable credit-to-deposit ratio are robust signs of internal capital utilization in industry, and the sequential deposit management presents industry-wide challenges. This high and double-digit advances growth puts the bank in a comfortable position to maintain its basic operating profitability and navigate different monetary cycles safely.