Union Bank Q2 profit up 30% to Rs 5,537 crore on strong loan growth
Union Bank of India, a large government-owned bank that takes deposits and lends for homes, farms, small firms and large companies, on October 19, 2026 submitted its investor presentation for the quarter ended September 30, 2026 . Net profit rose 30.31% to Rs 5,537 crore as net interest income rose 20.09% to Rs 10,583 crore, while gross bad loans fell to 2.42% . The quarter reads as advances-led growth funded by cheaper deposits and helped by cleaner books.
Interest income outpaced funding cost to lift profit
Net interest income, the difference between total interest income and interest expense, drove the quarter. Interest income grew faster than interest expense in both the quarter and half year .
Source:
| Rs crore, Sep quarter (3M) | Sep-25 | Jun-26 | Sep-26 |
|---|---|---|---|
| Net interest income | 8,812 | 10,037 | 10,583 |
| Operating profit | 6,814 | 8,003 | 8,108 |
| Net profit | 4,249 | 5,332 | 5,537 |
Source:
| Rs crore, half year (6M) | Sep-25 | Sep-26 |
|---|---|---|
| Net interest income | 17,925 | 20,620 |
| Operating profit | 13,723 | 16,110 |
| Net profit | 8,365 | 10,870 |
Growth was 18.99% in operating profit and 30.31% in net profit for the quarter, and 17.39% and 29.95% for the half year . Fee income supported other income while treasury and written-off recoveries dragged .
Source:
| Half-year margin and return, % | Sep-25 (6M) | Sep-26 (6M) |
|---|---|---|
| Net interest margin | 2.71 | 2.83 |
| Return on assets | 1.13 | 1.37 |
| Return on equity | 14.84 | 16.89 |
| Return on risk-weighted assets | 2.39 | 2.79 |
The margin turn follows a trough. Quarterly margin had dipped before rebounding in the June quarter .
Source:
| Quarter (3M) | Net interest margin, % |
|---|---|
| Jun-25 | 2.76 |
| Sep-25 | 2.67 |
| Dec-25 | 2.76 |
| Mar-26 | 2.64 |
| Jun-26 | 2.80 |
Management in July said 2.64% had bottomed out and the aim was to defend and then improve from 2.80% . It linked the June improvement to an 18 bps fall in deposit cost from shedding bulk deposits .
Costs stayed tight so operating leverage improved
Expenses grew much slower than income year on year. The cost-to-income ratio improved from 50.65% to 46.78%, but rose from 45.34% in June, indicating weaker efficiency sequentially .
Source:
| Quarter (3M) | Operating expenses, Rs crore | Cost to income, % |
|---|---|---|
| Sep-25 | 6,994 | 50.65 |
| Dec-25 | 6,927 | 49.95 |
| Mar-26 | 6,863 | 46.31 |
| Jun-26 | 6,638 | 45.34 |
| Sep-26 | 7,126 | 46.78 |
Management in July had flagged an improvement of almost 500 basis points in cost to income alongside record operating profit crossing Rs 8,000 crore .
Corporate loans led growth while retail, farm and small firms stayed broad
Loans grew far faster than deposits. Global advances rose 18.53% year on year and domestic advances rose 17.35%, lifting the two-year growth rate from a year ago .
Source:
| Advances, Rs crore | Sep-25 | Jun-26 | Sep-26 |
|---|---|---|---|
| Global advances | 9,75,207 | 10,96,331 | 11,55,876 |
| Domestic advances | 9,42,273 | 10,61,128 | 11,05,753 |
| RAM advances | 5,54,306 | 6,08,095 | 6,35,527 |
| Corporate and others | 4,20,901 | 4,88,236 | 5,20,349 |
Corporate and others rose 23.63% year on year, including overseas advances up 52.19% to Rs 50,123 crore . RAM, which is retail plus agriculture plus MSME, rose 14.65% .
Source:
| RAM, Rs crore | Sep-25 | Sep-26 |
|---|---|---|
| Retail | 2,38,506 | 2,65,323 |
| Agriculture | 1,68,405 | 1,89,810 |
| MSME | 1,47,395 | 1,80,394 |
Within retail, home loans were Rs 1,14,276 crore and vehicle loans were Rs 31,613 crore in Sep-26 . Within MSME, micro loans were Rs 93,836 crore, over half the MSME book . That left RAM at 55% of global advances and 57% of domestic advances, down from a year ago as corporate outgrew .
Management had guided to industry-plus growth, with 12% to 13% plus for advances and 18% to 20% ambition in the three RAM segments . It pointed to a corporate sanctioned-but-undisbursed pipeline of more than Rs 1,00,000 crore in July, while saying it did not want to buy growth through participation certificates .
Deposits leaned on CASA and retail as bulk shrank
Deposit growth was slower and deliberately remixed toward low-cost balances. CASA and retail term deposits grew strongly while bulk deposits shrank year on year .
Source:
| Deposits, Rs crore | Sep-25 | Jun-26 | Sep-26 |
|---|---|---|---|
| Global deposits | 12,34,621 | 12,83,366 | 13,19,455 |
| CASA | 4,01,854 | 4,50,305 | 4,60,728 |
| Retail term deposits | 5,45,547 | 5,81,021 | 5,98,197 |
| Bulk deposits incl CDs | 2,86,732 | 2,51,529 | 2,60,083 |
The domestic CASA ratio improved to 34.93% from 32.56% a year ago, though down from 35.10% in June . The presentation’s deposit-composition chart reports 11.42% year-on-year growth in CASA plus retail term deposits; its combined totals differ from the component balances in the table above .
The bank-reported global credit-deposit ratio rose to 88.13% from 79.67% and the domestic ratio to 84.34% from 77.01%, alongside faster loan growth than deposit growth . Liquidity stayed comfortable with average coverage at 120.00% and stable funding at 115.58% as on September 30, 2026 . This continues the churn described for FY26, with more than Rs 1,10,000 crore added in CASA plus retail term deposits and about Rs 70,000 crore of bulk shed .
Bad-loan stock fell as reductions exceeded fresh slippages
Gross and net bad-loan ratios fell to new lows in the series while coverage stayed above 95% .
Source:
| Quarter (3M) | Gross NPA, % | Net NPA, % | Provision coverage, % |
|---|---|---|---|
| Sep-25 | 3.29 | 0.55 | 95.13 |
| Dec-25 | 3.06 | 0.51 | 95.13 |
| Mar-26 | 2.82 | 0.48 | 95.03 |
| Jun-26 | 2.65 | 0.47 | 95.05 |
| Sep-26 | 2.42 | 0.42 | 95.20 |
Gross bad loans closed at Rs 27,916 crore against Rs 32,085 crore a year ago, and net bad loans at Rs 4,768 crore against Rs 5,209 crore . In the quarter, fresh slippages of Rs 1,856 crore were exceeded by total reductions of Rs 3,086 crore through cash recovery, upgrades and write-offs. These reductions include write-offs and should not be read as cash recoveries alone . Half-year credit cost was 0.29% against 0.34% and slippage ratio was 0.76% against 0.95% .
Farm stress stayed highest but improved; retail had the lowest sector NPA ratio
Among the four broad sectors below, agriculture has the highest bad-loan ratio, though it improved sharply; retail has the lowest, below large corporates and others .
Source:
| Sep-26 sector | Outstanding NPA, Rs crore | Sector NPA, % |
|---|---|---|
| Retail loans | 2,232 | 0.84 |
| Agriculture loans | 13,020 | 6.86 |
| MSME loans | 6,754 | 3.74 |
| Large corporates and others | 5,910 | 1.14 |
Restructured stock and the watch-list of special-mention accounts above Rs 5 crore both fell sharply from a year ago . Management in July had put that watch-list at Rs 2,382 crore in June, then the lowest, and guided full-year recoveries from technically written-off accounts of Rs 4,500-5,000 crore .
Capital buffer stayed high as loan book expanded
Capital adequacy eased slightly from March as risk-weighted assets rose with loans, but stayed strong year on year .
Source:
| As on | Total capital, Rs crore | Risk-weighted assets, Rs crore |
|---|---|---|
| Sep-25 | 1,23,775 | 7,24,948 |
| Mar-26 | 1,37,758 | 7,61,160 |
| Jun-26 | 1,40,801 | 7,62,673 |
| Sep-26 | 1,43,185 | 7,98,059 |
Capital adequacy was 17.94% in Q2 FY27, up 87 bps year on year, with CET-1 at 16.05%, up 168 bps . The multi-year path is steady build followed by a small dip as growth accelerated .
Source:
| Period | CRAR, % |
|---|---|
| FY23 | 16.04 |
| FY24 | 16.97 |
| FY25 | 18.02 |
| FY26 | 18.10 |
| Q2 FY27 | 17.94 |
The board has approved a FY27 plan of Rs 3,000 crore equity plus Rs 5,000 crore AT-1 for Rs 8,000 crore total . Management in July noted that even absorbing the full one-time expected-credit-loss need, partly covered by existing provisions, capital would ease only to about 17.54% from 18.10% .
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