ICICI Securities Recommends Buying City Union Bank, Targets Rs 325

City Union Bank Posts Strong Q4FY26 Performance

City Union Bank (CUBK) has reported a commendable farewell quarter for the incumbent MD&CEO, with the bank achieving strong loan growth, stable net interest margin (NIM) and return on assets (RoA), and a multi-year improvement in gross non-performing assets (GNPA) and specific mention of SMA2.

The bank reported a 26% year-over-year (YoY) and 9% quarter-over-quarter (QoQ) jump in loan growth, led by gold loans. This strong top-line growth percolated to a robust profit per share (PPOP), with a 31% YoY and 13% QoQ increase.

Key Highlights of Q4FY26 Performance

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The bank guided for stable NIM YoY and a 10-15 basis points (bps) of RoA improvement to ~1.65-1.7% by Q4FY27, compared to 1.56% in Q4FY26. City Union Bank highlighted its conservative approach in limiting its per gram gold price, which is detached from the jump in market prices.

Despite noting macro uncertainties, the bank pointed to its current SMA 2 (0.7%) and SMA 0+1+2 being at multi-year lows.

Outlook and Recommendation

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The research report recommends retaining a BUY rating on City Union Bank with a target price (TP) of INR 325, based on an adjusted book value (ABV) of ~1.8x for FY28E. The main risks identified are execution challenges and gold price volatility.