Union Bank's bad loans drop to lowest in at least two years, profit rises 30%
Union Bank of India, a large government-owned bank that takes deposits and lends to individuals, businesses, and corporates across the country, reported its June-quarter results on July 15, 2026. Standalone net profit rose 29.5% from a year ago to ₹5,332.30 crore, while gross non-performing assets (NPAs)—loans where borrowers have stopped repaying—fell to 2.65% of total advances, the lowest reading in the eight-quarter series the bank now discloses. The takeaway: the bank's asset quality has improved for seven straight quarters, and its operating profit has broken out of a year-long range, hitting the highest since at least mid-2024.
Source: Investor presentation, Jul 2026 ; official announcement. Net profit and operating profit figures are from the standalone financial results.
What sits behind the headline numbers
The bank's gross NPA ratio has now declined for seven consecutive quarters, from 4.36% in September 2024 to 2.65% in June 2026 . The net NPA ratio—gross bad loans minus the provisions set aside against them, expressed as a percentage of total advances—has halved over the same period, from 0.98% to 0.47% . The provision coverage ratio, which measures how much of the bad-loan pile is already provided for, has stayed above 95% for the last four quarters and touched 95.05% in June . A higher ratio means the bank has already set aside money for most of its problem loans, so future surprises are less likely to dent profits.
The improvement in asset quality has been driven by a combination of lower fresh slippages—new loans turning bad—and sustained recoveries. Fresh slippages in the June quarter were ₹2,062 crore, compared with ₹2,199 crore a year ago and ₹2,023 crore in the March quarter . The bank wrote off ₹2,273 crore of already fully provided NPAs during the quarter, which reduced the gross NPA stock without a corresponding hit to the profit-and-loss account . Cash recoveries added another ₹913 crore .
Operating profit breaks out of a range
Operating profit—the profit the bank makes from its core lending and fee business before setting aside money for bad loans and taxes—jumped to ₹8,002.58 crore in the June quarter. That is the highest since at least the September 2024 quarter, and it breaks a band of roughly ₹6,800–₹7,000 crore that the bank had been stuck in for the previous three quarters .
The key driver was net interest income—the difference between what the bank earns on loans and what it pays on deposits—which rose 10.14% from a year ago to ₹10,037 crore . The bank's net interest margin, a measure of profitability on its lending, improved to 2.80% from 2.76% a year ago and 2.64% in the March quarter . This happened despite a decline in the yield on advances, because the cost of funds stayed flat at 4.37% for the second consecutive quarter, down from 4.79% a year ago . The bank has been shedding high-cost bulk deposits and replacing them with lower-cost retail term deposits and current and savings account (CASA) balances, a strategy management has flagged in recent earnings calls .
Fee-based income grew 44.95% from a year ago to ₹3,215 crore, though treasury income halved to ₹645 crore and recoveries from written-off accounts fell 12.59% to ₹743 crore .
What management has been saying
Over the last several quarters, management has described a deliberate four-pillar strategy: shedding high-cost bulk deposits, shrinking the treasury portfolio and moving funds into higher-yielding loans, eliminating low-yielding inter-bank participation certificates, and shifting a low-yielding loan portfolio into longer-term assets . The CASA ratio improved from 32.51% in September 2025 to 35.21% in March 2026 . In the April 2026 earnings call, CEO Asheesh Pandey said the bank expects to "defend this point of level" on margins, and the June-quarter print of 2.80% suggests that defence is holding for now .
The bank also set aside an additional ₹100 crore as a contingency provision in the June quarter, building on a ₹700 crore one-time provision made in the March quarter. The total contingency buffer now stands at ₹800 crore [announcement, note 22]. This is not charged against the reported profit and does not affect the capital adequacy ratio, which stood at 18.46% with a core equity tier-1 ratio of 16.38% as of June 30 .
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