Union Bank of India (UNIONBANK.NS) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Union Bank of India Earnings Conference Call for the period December 31, 2025. The bank is represented by the Managing Director and CEO, Shri Asheesh Pandey; Executive Directors, Shri Nitesh Ranjan; Shri Ramasubramanian S; Shri Sanjay Rudra, Shri Amresh Prasad, and other members of top management. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ajay Bansal, Deputy General Manager. Thank you, and over to you, Mr. Bansal.

Thanks, sir. Good afternoon, ladies and gentlemen. I, Ajay Bansal, Head of Investor Relations, welcome you all for the Union Bank of India earnings con call for the period ended December 31, 2025. The structure of con call shall include a brief opening statement by respected MD and CEO sir, and then the floor will be open for interaction. Before getting into the con call, I will read out my usual disclaimer statement. I would like to submit that certain statements that may be discussed during the investor interaction may be forward-looking statements based on current expectations. These statements involve a number of risks, uncertainties and other factors that cause the actual results to differ from the statements. Investors are therefore requested to check this information independently before making any investment or other decisions. With this, I now request our respected MD and CEO sir for his opening remarks. Thank you, and over to you, sir.

Thank you so much, Mr. Ajay Bansal ji. Good afternoon, everyone. With great pleasure, I welcome all of you to Union Bank of India's, your bank's, financial results for quarter ended 31st of December 2025. Actually, we are meeting first time in this calendar year and the third time in the financial year. So on behalf of Union Bank family, I wish you and your family a very, very happy New Year. Also, today being a good day, it is Sankranti, it is Lohri, and Pongal. So all are coming since yesterday to next few days, which is a festive season across India. So on behalf of entire Union Bank family, I wish you and your families, happy festivities. Before we go to the figures, let me just set the tone, the context. First is the economy of the country; like last year, it was 6.5% to 6.7% band and other things. And now we see that -- expect around 7.4% in this year. So I think we are in the Goldilocks space, which is high growth combined with low inflation. And if we take the few initiatives, like various reforms are taken by various regulators, various reforms are being built by the government. So a few of that related to the government, the GST, which came as a big enabler for various industries, various participants; and the government CapEx, which is supplementing to the private CapEx as well. As far as banking is concerned, our regulator, since last 1 year, I think 125 basis points is the repo cut. Then CRR almost 100 points. And the liquidity easing through OMO, FX and everything has happened. So I think rationalization of various circulars. So I think these are giving the positive environment conducive to the growth, and the same is happening. Coming to your bank, Union Bank of India, just as a part of initial brief, in the EASE agenda, which is run by IBA and monitored/supervised by DFS, it is across all public sector banks, majorly with an objective of creating a good ecosystem facilitating to the growth, to the digital and to the customer service, we stand 2.0. And recently, a few days back, we had an IBA Tech award and our bank has received 4 technology awards, also the Best Bank Tech award. So I think with this brief, we have already -- we had a Board today and our Audit Committee and the Board, the Board has adopted the financial statements. And the same, in the form of a presentation, it has been uploaded to stock exchanges as per the regulations. And you will see that as far as the business figures are there, mostly what generally the questions are asked, we have tried to in-build within the presentation itself. Meanwhile, the important point is related to the staff members. So that is why you will see 1 or 2 slides pertaining to our staff, because I'm from this bank, and when I came back, I always say the Union Bank staff, Unionites, are the best. Everybody will say, but then yes, it is a separate sentence for me. So that also gives a color like how many engineers. So almost, I think, out of 74,000, 32,000 approximately are like FRM, engineers, CAs and other streams. So that is also a good composition. It's just about training and other things. Similarly, the bank has started Project Muskaan, which is also related to ease of doing business. Actually, more than 500 -- we have actually done some bottom-up approach survey. We have done a lot of groundwork. And within that, we are trying to sort out and streamline the things, so that there is a "muskaan". Project Muskaan is nothing but a very small thing, like "muskaan" in the face of our staff members and the customers. So actually, the purpose and objective of the project is to streamline, smoothen, and at the same time, strengthen your risk mitigation across the bank. And certainly, when you do all these things, there is a cost cutting for sure. And there is a -- technology, as I briefed initially, there is a lot of the technology already in-built the in bank, whether AI sort of thing or whether the robotic process automation, or whether -- even I would say the bank is one of the banks where 2 DC and 2 DR are there, all the 4, correct? So I think that is one thing. I think on technology, our ED sir will also brief whenever you are having any questions. But at the same time, coming to the financial performance, net profit of your bank stood at INR 5,017 crores for this quarter ended December '25. Interest income stood at INR 26,443 crores. The business growth, certainly, here you will see the figure like 5.04%, and the gross advances increased by 7.13%, and the total deposits grew by 3.36%. But here, before going into further detail in the financials, I would like to just inform you that very carefully, we actually scrutinized, worked upon, thought and actually brainstormed on each of our portfolio. And in a very nutshell, the 4 pillars we work. The first thing is that we already had the funds inside. So around INR 40,000 crores -- INR 38,000 crores to INR 40,000 crores, we have shed off the bulk deposits, which was at the higher cost. So that is point number one on the first pillar. The second thing is the treasury has contracted by INR 15,000 crores. So that has moved to the credit side. The third thing is that we had an IBPC, which we discussed in the last con call as well. So that is now INR 20,000 crores is not there. So I think that has become 0. Then around INR 10,000 crores, we had some portfolio on a very low yielding, that actually we moved to long-term loans. So there, again, we could gain something. Now coming to the point, in December '24, our NIM was around 2.91%. And though there is a rate cut of 125 basis points since then till 31st of December '25, but then if you see from 2.91%, we stand at 2.76%. So I think that is where we could shield, right? And from September quarter, if you see, there is an increase in the NIM, opposite way. So I think that is the key point which justifies that the work which has been done on the 4 pillars, how it has been worked or impacted upon. So with this, I think the capital ratios are all good. The liquidity ratios are good, we have given in the presentation. And the growth in the RAM sector certainly increased by 11.50%, 21.67% growth in retail and 19.75% [ growth in MSME advances ]. So robust growth is coming into the RAM segment. Even there is a growth, I would say, in the corporate, but it would not be visible because INR 20,000 crores plus INR 10,000 crores, INR 30,000 crores we have churned within the portfolio. And certainly, it is an inflow from new proposals, good proposals. And if you see the portfolio, the AAA to A, it is almost, I think how much, 95%. So I think that is the level of the book which the bank is carrying. And while coming to the stress side, the GNPA and NNPA, both have reduced, both are at the comfortable range. And coming to the SMA-2, we are again at the very lowest level of INR 4,285 crores above INR 5 crores. I think this also gives a good color that the first time bank has crossed INR 10 lakh crores of advances as a bank. The return on assets is approximately -- not approximately, exactly 1.35%, which is again the highest one. The ROE is again the highest one. CASA, certainly it is point to be noted, like 1.40 (sic) [ 140 ] basis points is increased from quarter-to-quarter. So I think this is one of the good thing which has happened. And you can see within the 3 months, the reduction in the cost of funds and deposit is really very steep. And with this all, certainly, the quality of asset is being maintained very well. The SMA is maintained very well. The PCR is almost more than 95%. We are comfortable with cost of -- credit cost is again too low. Slippage ratio is again low. Keeping in view all this, we have not actually put our money into the provision, but we have put into the growth. I think this is one of the main point of the working of the entire senior management, who are sitting in this boardroom, inclusive of our vertical heads, GMs, CGMs and all. And with this, I hand over to you, Mr. Bansal and to all our esteemed investors for any query which they have. We would all -- along with me -- I am accompanied by my Executive Directors, Shri Nitesh Ranjan ji, Shri Rama ji, Shri Sanjay Rudra ji, Shri Amresh ji, along with my all CGMs and vertical heads. You may please start the queries.

Thank you, sir, for your opening remarks. Now you can start.

[Operator Instructions] The first question comes from the line of Mahrukh Adajania with Nuvama.

Congratulations, sir, to you and your team. Sir, I had a couple of questions. Firstly, if you see your interest income breakdown, then the other interest is high. It's around INR 205 crores -- INR 206 crores. And it's been in the range of around INR 100 crores in the last few quarters. So what is the breakdown of this other income -- other interest income? That's my first question, and then I have one more.

Mahrukh, we'll come back to you on the exact breakdown, but it also includes our income that we get from the PSL deposits that we place. So that's a component. So we will give you the exact breakdown, but it includes the RIFD (sic) [ RIDF ]...

I think you can brief. It is related to recovery, I think.

Sorry, RIDF?

See, RIDF, we have invested some funds, that interest is being recovered, it is being done, that we have shown as other income actually.

Other interest income. Okay. But how much? Is it around -- it's INR 100 crores or what?

See, other income consists of some more parameters, which we will send you across in full detail. Now coming to NII, madam, NII, let me brief you, there were 2 rate cuts in between. So our book MCLR is around 38%. The other remaining is the EBLR that is repo-linked benchmarking. So I think the work which was done extensively, so the NII, which we can -- because there is a good growth in the RAM sector and also corporate book which we actually worked a lot upon that. So I think that is why even though there is a good amount of rate cut and it was conveyed further, but then we could have more sort of income even when compared to earlier.

RIDF INR 198 crores.

RIDF is INR 198 crores. Actually, that is the only thing. So I think that was the case of NII, which you asked. Also, when you sanction it, like we still have around INR 24,000 crores to INR 26,000 crores of disbursement. So generally, you will see that most of the quarter, you will not get to use that interest income, because once you start sanctioning, then it takes 10 to 15 days, 20 days time for the disbursement. So then something has been sanctioned in October, November, then most of the things in December. So certainly -- but the continuous and the regular book which was sanctioned and disbursed, I think that has given good results. Over to you, madam.

Sir, my other question is that based on the draft ECL norms, what would be the run rate impact, as in what will be, on an ongoing basis, the increase in your credit cost if ECL were to be implemented as it is in the draft form?

We have worked upon it, madam. And if we take the total requirement and the ECL keeping in view our book and the provisions which we are already holding, if we come to the netting position, it is hardly INR 4,200 crores to INR 4,300 crores range. It is not more than that required.

Right. That is the transition impact. I'm talking about on a run rate basis, to see...

Yes, Mahrukh, I think even on a run rate basis, you can see that our credit cost has generally been bearing between the 20 to 40 bps mark. So while these are still draft and we await -- we made certain recommendations in terms of some changes that we want. Let's discuss it once the final guidelines come, because that will actually be the right way to look at it. We are not expecting too much of a change in terms of our current credit cost versus what I expected on the ECL.

Yes. Even if you see the SMA-2, it is hardly INR 4,285 crores in the entire book. So the credit cost, slippage ratio is well, well, well within control level. And now I'm coming to which is not an SMA. So 95% of the corporate book is A and above, retail one BBB and above. So I think that is the inference which you can draw. The loan book is quite strong enough. Meanwhile, the bank has implemented various early warning signals. And now the fintechs, there is software, there is feet-on-street, and the entire system is working. So bank has strengthened the collection systems. So I think that the robustness is there. So we are not much worried about, but the transition, as you said, migration is not much right now. But the run rate, as you said, let us see how it happens, but then we are on the safer side.

Sure. And what would be your SMA-2 below INR 5 crores?

Below INR 5 crores, I think it will be hardly in the range of INR 24,000 crores, something like that.

Sorry, how much?

INR 24,000 crores, INR 25,000 crores. Because generally what happens that when you apply the interest, many of the companies, it comes very next day. Next day in the sense, morning. So SMA-0 is...

Mahrukh, we'll give you the exact number, because we don't disclose that in our presentation. We only disclosed above INR 5 crores. So we'll come back to you on the below INR 5 crores.

Next question comes from the line of Jai Mundhra with ICICI Securities.

Congratulations on a good number and revival in the loan growth. Sir, my first question is, on the loan growth, you also talked about that there are ongoing mix changes within corporate and some of the lower-yielding loan book getting transferred. So amidst all this, how should one look at the loan growth going ahead? Is this mix change is broadly over? And can you like sustain this 4% or maybe higher Q-o-Q loan growth? And how soon can you reach industry level loan growth on a Y-o-Y basis?

Yes. See, you have actually grabbed it. Around INR 30,000 crores in the corporate itself which we have churned out. So that is explicitly actually it is visible like how it is and what would be the actual growth. Now it is a very big bank. It is an exercise which we have taken very cautiously. There will be something going forward in this quarter as well. But the thing is that the way in which we have grown in this quarter, certainly, the growth in this last quarter will be more than that. Because when you galvanize the entire machinery and you move into -- even right now, in the corporate only I'm saying, around INR 24,000 crores to INR 26,000 crores is the sanction and disbursement pending. And we further have a good pipeline in various stages of sanction. So I think this is like we start with. So we expect better than this in this quarter. And yes, the aspiration, the market which is having the growth certainly is our aspiration, and we will be moving in that line only.

Sure. So I mean, to conclude what you're saying is that this kind of a run rate growth on a Q-o-Q basis can be sustained and you would be hopeful of achieving industry level growth Y-o-Y basis soon, right? That is despite all these challenges...

Yes, better than this one, we expect. Better than this one, we expect in the coming quarters.

And secondly, sir, if you can highlight, was there any provision carved out for gratuity, leave encashment under the new labor code, because I believe that was like mandatory, right, all the -- at least the gratuity part was mandatory. Have we done? Have we provided? If you can quantify that number?

Yes. See, there are 2 things in the labor code broadly. The one is on the welfare benefit side. So certainly, what is there in the code and what is given in the banking industry under bipartite is much better. So that is out of question. Now coming to the second one, like the leave encashment, gratuity and other things, you see this is a bank which has for a long -- like we are 107 years old. Now this impact is more on which are younger age banks, because moving from 5 years to 1 year and other things. Until now, they were not in that group, because 5 years was the minimum. But in case of the banks like our and other public sector banks, the impact may not be much. But at the same time, as per our calculation, maximum it will be in the range of [ INR 10 crores ], because some of the court, some of the rules yet to be received. So that is what we are waiting even right now. Because, see, as per the bipartite, there is a basic pay and then there is a special pay. So there is some even clarification and other things which is under discussion. But then maximum, I think as per our calculation, it is coming in the range of INR 10 crores to INR 15 crores, not much.

Okay. And this is what you have done already in this quarter, or this can be -- this is the only impact, right, INR 10 crores, INR 15 crores, nothing material...

Yes, yes. It will not be, because gratuity, actually, we are already doing. So that will not make much of a -- yes.

Okay. Understood. And sir, another thing is on trade release measure, right? So during the quarter, RBI had given a dispensation for moratorium for exporters. If you can quantify what was the request in rupees crores for our bank?

Yes. Actually, the total -- till date, we have sanctioned around 78 of the proposals, around INR 500 crores, and within which 61 proposals of 216.64 crores have already been disbursed. So actually, we already -- we met with various clients in last 3 months and there were some specific pockets as well. So we understood the requirement as a conduit for the economy and the measures which are taken by the government of India. And all these are very good companies actually. So various rated also and good standing. So a few more proposals actually are there, but which are in pipeline. But this what figure I'm giving you is the sanctioned and disbursed.

Mr. Mundhra, please rejoin the queue for more questions. Next question comes from the line of CA, Dr. Ashok Ajmera, Chairman with Ajcon.

Asheesh sir and the entire team of the Union Bank, compliments to you, especially for the net profit going beyond INR 5,000 crores, INR 5,017 crores in this quarter, which is very heartening to note. The bank has been in the range which has come, I think, in the fourth quarter of 2025 at around INR 4,985 crores, but crossing INR 5,000 crores and coming to INR 5,017 crores is really a commendable job as far as the profitability of the bank is concerned. Having said that, sir, I echo the same sentiments of one of my other colleagues also about the growth in the business, that is overall the advances and the deposits. While in this quarter we have addressed the credit growth, at least in this quarter we are positive 4%, and going forward you are already assured that the coming quarters will be better. But still, if you look at the deposit growth, that is just 0.95% (sic) [ -0.95% ]. And the overall, if you take 9 months also, it is only 3.88%. So unless we match that, like how are you going to increase your advances? When your CD ratio is already 83.89%, your CRAR has come down to 16.49%, so how do we -- with this kind of deposit in spite of all the churning, because if you look at even last 7 quarters also, the deposit growth is only 2.19% over the 7 quarters, right, from the Q1 of FY '25. So what is going to be drastically done by you so as to bring the deposit also up to match with your credit growth target, sir?

See -- Ajmera sir, thank you so much for the appreciation to the bank, your bank, and the staff members. I would put it one very clear way that the raising of deposits is not an issue and it was not an issue. Actually, we knew where the money is, where to deploy. This is what exactly we have done last 3 months. Now if you see the 3, 4 things, then probably you will understand that -- otherwise, excess money has cost more rather than creating a value more. The first thing was the treasury. Because we have shed off INR 40,000 crores of our bulk deposit, which actually helped us in reducing the LCR requirement, and we had a huge excess SLR, and other securities as well, non-SLR. So INR 15,000 crores of premium book is contracted and we have shifted. There was a gap of 3% to 4% because our domestic CD ratio is below 81%. So in that case, we had 3% to 4% of the range to go about it, second point. Third point is, first time the CASA of the bank has increased by 140 basis points. Now if you take the CASA, around INR 8,000 crores to INR 9,000 crores CASA is increased. Meanwhile, the retail term deposit, actually, there the question comes. So they have put together both, around INR 15,000 crores to INR 16,000 crores, there is an increase. Now that portion, INR 15,000 crores, INR 16,000 crores plus, further if you take INR 15,000 crores of my treasury book, so straight away you are getting INR 31,000 crores, which is a resource for me for the -- even if I'm not taking the CD ratio increase by 3 percent points. And that is the reason outcome if you will see, the CD ratio is within range, the LCR is within range, the NSFR is within range, and all the ratios which are required or the Board approved are well within range. So here, absolutely no issues. Now coming to the coming quarters. Now coming quarters, every bank is having the asset level being the buckets. And certainly, we are working upon that. But more so, we are working more on increasing the CASA. So last quarter itself, we could get 140 basis points. That is a very steep increase and which has resulted, even though the 2 rate cuts from September and the other onwards, so I think even in that scenario if the NIM is increasing, that gives a good sort of a color and influence. So now coming forward to this, and also when we talk about deposit, it is not the only resource. There is a resource of refinance, there is a resource of -- so MSME refinance also we have done to an extent of INR 5,000 crores. So we have lived as a bank. When you manage things, you have various resources. So keeping in view resources, and that's the reason that all the ratios, there is no abnormality or aberration. And actually, this is the reason why this time at least 5 efficiency parameters are touching the highest ones. Now coming to this quarter, we already have a strategy in place. There are -- 3, 4 new structures are created. One is the ecosystem banking. And the team is working really hard, and it is a very structural change which the bank has done. Probably the next time we meet somewhere in April, certainly, we'll be in a position to speak more about it.

Point well taken, sir. Only thing that now at least a time should come when we are at par with the industry or even better, which used to be some time back also. And that will ultimately be requiring the deposit by whatever means it comes so as to match the growth. There are other means available. I mean liquidity is there with you, but this mismatch has to be answered, sir. So point well taken, sir. Sir, one of my other small observation is, while the operating profit has gone up by about INR 100 crores in this quarter, INR 120 crores something, our net profit has gone up substantially. And the main reason is that the provision on standard asset has come down to INR 176 crores as compared to INR 882 crores in the last quarter. So going forward -- and that is the reason our credit cost is also very, very minimum. So going forward, can we take it as if the provisioning will be less only and the more profit will remain coming in the books only?

Coming to the provision, certainly, we need to look into 3, 4, 5 ratios or parameters. One is the SMA, one is the loan book, and one is the PCR, how much, and one is the GNPA and NNPA. So I think these 4, 5 things very clearly tell -- credit cost included there, I think these 7 parameters. This gives a very good inference that what could be the provision requirement going forward, number one. Number two, coming to the OP. See, when you are seeing this growth, you are always there in all the con calls, analyst meets in the month of June, September, this quarter, and you have seen what happens, what sort of credit growth you are seeing. Even if I add INR 30,000 crores further, it is 9%. See, what happens, it doesn't happen on the 1st of October. It happens during the 90 days time. Now that something would have been done, because if you start working, then something happens in November, something happens in December. So the entire -- that is why the important thing is what is your average advances growth and average deposit and average CASA growth. Actually, in our bank, we are totally working upon these 3 figures. Now the thing is that once you have achieved the growth, in the next quarter, certainly, you will be in a position to get the interest income out of that. So you cannot eventually spread out for the 90 days. So probably like in the month of December, because once you sanction -- so sanctioning itself I will tell you it takes minimum 20, 25 days. But then the disbursement further takes 10 to 15 days. So I think this also gives an insight into probably how it would have been spread over the 90 days. So I think, like you asked OP, so we expect OP to be -- though, I will tell you, OP is the net interest income and, again, the factor of reducing rate of interest. But then we have shielded, even in the 90 days period, with the given circumstances which we briefed you, but even when we have shielded, we have made it better. So I think we actually expect better than this performance in the coming quarters.

Sir, can you give some color on our technology upgradation and the technology budget, IT budget and where are we placed? And is there any major ease of doing business, something major is being done in the technology front?

Yes. I think initially itself I told about EASE and I told about IBA Technology Award and Project Muskaan. Since our ED sir is running this project and so many things in the bank, and actually, when we got the Best Tech Award, I would like him to address this to all the investors.

Yes. Thank you. So Ajmera ji, as you heard MD and CEO in the beginning that the current focus of leveraging technology is also to create convenience for our employees, which will ultimately get converted into convenience for our customers. So under Project Muskaan, we have currently identified around 300-odd processes which we are trying to simplify, so that our employees can serve the customers in a better way. And as we progress, more and more processes will be covered under this project for the simplification. But otherwise, as you asked about the budget, we have, for this year, around INR 1,600 crores of capital budget for the technology, and it is higher than the previous year's level also. And that is going on strengthening the infrastructure network as well as strengthening our cybersecurity framework. See, currently, we are in the process of implementing Phase 2 of the Resilience Center of Excellence. which is more a proactive approach for responding to the threats and the disruptions. The next-gen cybersecurity center of excellence that we have established, that is also almost at the kind of closure stage. Maybe a couple of months, we'll be doing. And that is, again, the most advanced technology so far as the security operations center and the cybersecurity management is concerned. You'll also be happy -- the investor community will be happy to note that bank is, and MD and CEO touched in the beginning that we are already running on not only the DC, DR, but near DC and near DR also. On top of that, the digital banking platform that we have established, it is actually having a foresight architecture, which is always active-active, auto load balancing. And in terms of the usage, if you look at, and I think we have given the numbers also somewhere, that today almost 80% of the liability side relationship, liability side accounts are getting opened using the digital means. Similarly, on the lending side, some of the low-ticket loans on the retail, agri and MSME, we are already doing on this. And you would have also noticed in our presentation, we have touched a bit on what we are going to do in the next -- for the digital and technology, because now we have the right set of infrastructure, and we have to leverage in terms of business. So we are setting up a digital business vertical, which will ensure that we are approaching our customer and serving them digitally through the 3 approaches. One is the do-it-yourself, for the customers who are very tech and digital heavy, who can get the banking services on their own through the links and the icons available on the website, apps and the social media channels. Second is the assist channel, which through our call center, we'll be assisting the customer in completing the journey. And third is that doing the digital approach of business at the branch level. So that is what the approach is. Now I think today, we are all set to kind of ramp up the business contribution, profitability contribution from the digital. Thank you.

Mr. Ajmera, please rejoin the queue for more questions. [Operator Instructions] Next question comes from the line of Dixit Doshi with White Stone Financial Advisors Private Limited.

A couple of questions. Firstly, in terms of provisions, you did mention that it has come down. But going forward to meet the ECL provision, do you expect that we'll increase the standard asset provision, or it will remain at lower end only? And my second question is, so in H1, we did not have any PSLC income, but a small amount of INR 100 crores has come in this quarter. So going forward from next year onwards, can we go back to the level of FY '25 what we have done?

Yes. Doshi ji, for this, a very good question, and I'm thankful to you, you have noticed very keenly. So the first part related to ECL, I would request my ED sir, Rudra ji; and for PSLC, I would request my ED sir, Mr. Rama ji, to answer.

Yes. Good afternoon. I am Sanjay Rudra here. Regarding the provision part which you said has come down, basically, if you see, our total slippage for the December quarter is around INR 1,800 crores. And almost the recovery and upgradation is also to the extent of the similar amount. And we are standing at a PCR of 95%. So whatever the provision was required for the fresh slippages accounts, we already had adequate release from the recovery and upgradation which has happened. So there was limited requirement for provisions, that is why our credit cost and provisions requirement has come down. Going forward, whether it is sustainable or not? Yes, we are working very hard on containing the slippages. And if you see, there is no -- corporate slippages has not happened. And going forward, it should also be well managed. So we are confident that our provision requirement going forward will also be on a lower side. Regarding the ECL part, see, we have already made adequate provision. As you know, [ PCR ] we have made 95% provisions. And on a half yearly basis, we are making the assessment on the IndAS also. And what we observed that there is a gap between -- earlier the gap was high, but gradually, over a period of time, in the 2, 3 years, as we reached to the 95% provision, our ECL provision requirement has come down. And there is not much gap between the existing provisions and the required provisions under the ECL guidelines. And bank is well placed, bank is having adequate profit to take care of the provision requirement under the ECL. In fact, in the guidelines that 5 years dispensation is given to meet the requirement of the provisions requirement. But most likely bank may not go for that type of facility. Bank is well capitalized and profit is adequate to take care of ECL provision requirement in the first year itself. That is as far as the ECL is concerned.

And regarding PSLC profit, yes, we tried but in the first half of the financial year, we were not having any opportunity to sell the PSLC certificates, which we did in the last year. Last year, we did a very good business on account of the PSLC sale. It was around INR 950 crores of the profit we booked in the first half year. But this year, that opportunity was not available. And gradually, the portfolio was built. And in third quarter, we were able to sell a small amount and we booked a profit of around INR 108 crores. Going forward also, the department is working very hard on the priority sector lending. And we are hopeful that next quarter also, if possible, we will try to sell some PSLC to have additional profit. But definitely, going forward in the next year onwards, we think we will be able to leverage the PSL book and we'll be able to book a good amount of profit going forward.

Next question comes from the line of Bhavik Shah with InCred Research.

Congrats on very good results. Sir, 2 things. First, I think, sir, if I look at your investments book, I understand we have sold a lot of mutual fund investments, around INR 10,000 crores. And overall also, we have sold some SLR securities. And your income on investments in the interest income earned line has gone up by 4% quarter-over-quarter. I just wanted to understand like what's happening here, if you can kind of help explain. And also, is your treasury gain mainly because of the mutual fund sale income or -- yes?

No, it is, I think the normal treasury operations since last quarter also, if you -- that [ NSDL ] if you decrease, that was around INR 500 crores, that is in the same range. Now coming to the treasury, the banking job is to lend first and on the quality assets and create a long-term asset. So even if now, if you see what is the yield on the SLR or non-SLR, and if you see what are the options you have when you lend it into retail or agri -- not agri, but MSME and the corporate and the mid-corporate. So probably certainly the option #2 is much better. So that's the reason we contracted our treasury by INR 15,000 crores and shifted it to better yielding and better quality assets.

Okay. Okay. And sir, is your treasury gain of INR 580 crores mainly because of sale of mutual funds or no? That is not the way to look at it.

See, it will be like the foreign exchange income will be there. Then certainly, when you sell it from the HTM, and certainly, sometimes maybe you play with the arbitrage also you do it, some swaps are there. Yes, you can brief, no problem.

This includes the mutual fund income also. This is a part that is HTM sale also is there, then exchange income also. Because of this fluctuation, we could turn up more exchange income. All this has led to this INR 900 crores treasury income. If you compare with the Q3 of '24, it has grown substantially above that number.

Mr. Shah, please rejoin the queue for more questions. Next question comes from the line of Kunal Shah with Citigroup.

So a couple of questions. Firstly, on the recovery part. So when we look at the recoveries from written-off accounts, compared to the run rate over the past 5, 6 quarters, it has come down a bit and overall recovery as well. So where should we see it settling over the next 3 to 4-odd quarters?

Yes. Kunal, if you're looking at it, see recovery, actually, what we are having earlier, you cannot be comparing, because the portfolio which we are -- the new slippages are very much less actually. And bank is also trying to see that whatever the left out recovery we have been getting with various types like OTS, NCLT, everything. You look at it in the last quarter, our -- bottom of the recovery around INR 3,000 crores or INR 2,800 crores that we have recovered, if you look at it, the maximum recovery we have in a single account is only INR 130 crores, that is the only account above INR 100 crores. So we are concentrating on the mid accounts and small accounts and try to get the recovery to maximum extent possible. Going forward, yes, we will be expecting -- this quarter, there will be some recoveries that are expected. But I think it will be based on whatever left out portfolio, which we'll be able to do that.

There are 3 levels. One is through NCLT or the other route. Another one is, you go with the OTS and with the party bipartite. Another is the smaller amounts through Lok Adalat or maybe the property sale and other things, taking SARFAESI action and all. So the normal one is always there, and we are actually better than the earlier quarters. Actually, we expect -- as you said, we were doing good. Actually, we were expecting some 3, 4 accounts. We cannot name them. It was very close, but then probably we may see the fruits in this quarter, probably.

Sure. And just a clarification on provisioning. So last quarter, you indicated some prudent provisioning done towards ECL, and that's why standard asset provisioning was higher. This quarter, I believe, from your explanation, there doesn't seem to be any provisioning towards the ECL in this quarter. And second is on the fraud cases, okay, maybe what the provisioning was done. So was it like 100% provided earlier and there was nothing which was provided during the quarter for the fraud which were reported this quarter?

Yes. So Kunal, you're right. We did mention in the last analyst call that we've taken some additional standard asset provisioning to reduce the buffer that's required to meet ECL provisions. You'll see that we've done that in Q1 as well as in Q2. Given the low slippages in this quarter as well as the PCR of 95%, we did not feel the need to make any standard assets provisioning in this quarter. So that explains why we're not seeing a big standard assets provisioning in the current quarter.

Mr. Shah, please rejoin the queue for more questions. Next question comes from the line of [ Jairam with JN Wealth ].

Congratulations on the great set of numbers. I would like to ask you 2 basic questions, which are: do you expect NIMs in FY 2027 to improve, stay stable or moderate? And what will influence this? And the other question is, what kind of revenue mix are you expecting from retail book and MSME book and agri book?

So I could not understand. Please can you repeat, please? Sorry, we could not get it.

Do you expect the NIMs in FY 2027 to improve or stay stable or moderate? And what is going to influence this?

What is going to?

Influence it.

Okay. You would like to take, Amresh ji?

Actually, what we see that the NIM will further improve, because whatever the deposit was taken, that is going to be repriced in this quarter or next financial year. And the impact, you have already seen our book that our MCLR-related books are only 32% and the balance are in the shape of the -- they are linked with the external rate of interest. So when the rate cut happens, the impact of the rate cut automatically will be passed on to that team. But the deposits and cost of funds is being repriced after the maturity period. So definitely, if that happens in this quarter and next quarter onwards, definitely, NIM is going to improve. That is our expectation.

So I think what you asked, like just to support ED Amresh sir, actually, last time also same thing was asked, we only said one thing, we would like to defend, but then we have come better. Again, we would like to say to you, we will defend. Let us see how it happens in the month of April. Now coming to the parameters which is going to influence it. See, the one thing is that in the downward revision scenario, when repo rate is being cut, suddenly you will see, because there is a deposit lag behind by a few months or quarters, but then there is an immediate impact on the loan part, asset part. So I think that is one thing. But even then we have defended. So that is one part. Second one is how you place yourself with the CASA, and how you place yourself with the retail term deposit, and how you place with your field deposits. And I think the more important thing for the NIM is that how you manage your average advances during the quarter, because the last moment will probably not make it more. So I think we all are working in the same line. Just I wanted to supplement the first part which our Amresh sir ED has already told. The parameters which you have asked, I think this one. The second part of your question was that how you foresee the RAM, that retail and MSME growth and all and the corporate, so what I would like to suggest, my ED, Rama sir will tell you on the RAM side. And from the corporate book side, our ED, Shri Amresh ji, will speak.

Yes. So if you're looking at the retail and the MSME, consistently this year we have been showing a good growth year-on-year, it is around 22% and 20%. Agri, yes, we had some issues, but if you look at it, in the last quarter, we have picked up and we have shown a good growth on the agriculture. Going forward, we will be driving -- because this all have to be done by the field at the branch level, so we will be driving this business and try to maintain the same 58-42 or 60-40 ratio between RAM and the [ profit ].

Regarding growth of the corporate book, sir, MD sir has already said we are having some pipelines, already sanctions are there, and some good number of proposals are also in hand which are going to be sanctioned this quarter or a year. So we don't see any challenge in growing the corporate book also, sir.

Mr. [ Jairam ], please rejoin the queue for more questions. Next question comes from the line of Parth M. Gutka with 360 One Capital.

What is your NIM guidance for FY '26?

Yes. NIM, I think we have already discussed in the last quarter also when we met on 28th or 29th of October. One stand which we communicated that we would like to defend it. And let us see. So actually, we moved better, though the condition or maybe the scenario was towards the downside. So still we will say that we would like to defend 2.76%. But then we hope for a better, I think. Though you may be finding a different scenario, but then there was some opportunity in our shuffling from the book which we have done.

Okay. Fair. And second question is how much of the deposits are yet to reprice in terms of retail term deposits and certificate of deposits in quarter 4?

Yes. See, the deposits which are going to mature in this quarter are in the range of [ 1 plus around 50 lakhs ]. So that are under different rates. So it consists of even the bulk side and it also consists on the retail side. But how we are looking at it, the composition should be in such a fashion that doesn't impact my LCR much, number one. Number two, the high cost, we are very keen. Actually, even when we are quoting, we are very specific to the quote. Even to the financial institutions, we are actually not quoting at a higher rate, because the runoff factor is 100% on that. But meanwhile, we have created a different structure, probably the only one which we have created is the ecosystem banking, which is headed by a very senior official at the general manager level. And he's having almost 1,600 people under him across India, and he's having units at various locations. So that is the effort which initial, if you want to know, the initial sort of results that our CASA has been improved with 140 basis points. So we are actually thinking more of adding RTD, adding CASA. And then to an extent left out, we will be taking the deposit. But certainly, in a range which is acceptable to us.

Mr. Gutka, please rejoin the queue for more questions. Next question comes from the line of Antariksha with ICICI Prudential.

Just wanted to ask what is the size of the gold loan book that we have, both in retail and agri?

Our gold loan portfolio is around INR 84,000 crores total. Actually, let me share with you, we were hovering at the same level for the past 2 quarters. But now this quarter, there is an increase of around INR 2,200 crores. But at the same time, we were actually -- it is not like the revenue is not there. It is not like we didn't want it, but we wanted to strengthen the system and procedure in that. And actually, we have done it somewhere in the month of October and November. Now we are poised for taking it forward. So I think that we will move forward. And our yield is also good. Actually, it is coming around -- until now, I can take not exactly with the quarter, but the 9 months is coming around 8.85%, 9% level.

This here saying agri.

I'm saying about gold -- it's all the 3 total, with retail and agri. Agri is about INR 48,000 crores.

And just wanted to know, incrementally, what LTV are you doing these loans at, in agri as well as retail?

75% in non-agri actually LTV and 85% in agri.

Mr. Antariksha, please rejoin the queue for more questions. Next question comes from the line of Akshay Badlani with HDFC Securities.

So on the credit cost, just wanted to understand, so why -- like we used to be around 65, 75 bps kind of an average run rate. We have come down to 10 bps as of now. So is it largely because of slippages coming down? Or is there some one-off in terms of write-backs or recoveries that we are getting that the credit cost is at this range? And what would be your steady-state credit cost that you would guide for going forward sustainably?

I think if you see the movement of the provision, probably it gives some color out of it. Coming to the second point, there are 6, 7 parameters with the earlier questions, which I replied. The one is the corporate book, what is the rating. So around 95% of the total loan book is BBB and above, investment grade. And mostly it is in A and above. So that is the first part. The second part is that the SMA position, which we have already given in the presentation, is the almost lowest right now in the absolute terms, which is INR 4,285 crores. So this is the second point. The third point is that the slippage ratio is also well within control. Actually, the bank has taken why you have strengthened the credit book on the one side. The other side is you have developed the better collection efficiency mechanism using the software apps and feet on street. So now actually that has given the results. So going forward, we do not expect much of the things. We think in the same fashion to go going forward as well. And one more thing. Probably if you see my restructured book, because there is one more portfolio from where the credit cost slippages come. So if you take my restructured book also, even the 50% of that is we have realized already realized as an NPA. So the question is that when already you have taken care of the things, probably we do not foresee until and unless the situation goes something very heavier like COVID or something like that, we foresee in a similar fashion to go about.

So any guidance around credit costs, like what we could give?

Yes, in a similar way, like 1 or 2 quarters which you are doing, in the same range.

Yes. If you look at our 9 months, credit cost is about 26 bps, right? So I mean, what sir is indicating is we would like to try and achieve that kind of a number going forward, including -- because we have to also evaluate as and when ECL comes in, right? So it will be a number which will move, but hopefully around that.

Mr. Badlani, please rejoin the queue for more questions. Next question comes from the line of Ashlesh Sonje with Kotak Securities.

Two questions from my side. Firstly, if I look at the total recoveries, which you report in your presentation on Slide #15. In FY '25, you did upwards of INR 15,000 crores total recovery, going by the new presentation which you are sharing. So far in FY '26, you have done some INR 9,200 crores. So what do you think about the run rate -- what do you think about the outlook for FY '26 and FY '27 on this number?

On the recoveries, you are asking what will be going forward, correct?

Yes, yes.

That's what I told. Just comparing to the last year, the portfolio is different. Now the slippages are coming down actually. So still whatever is available, we have already done INR 9,200 crores. We expect that -- sir has already told, there are some recoveries which we expected in the last quarter, which we will be releasing it. We will be ending up around I think most probably around -- we are not giving any guidance this year. So I cannot give exact number. But you can expect more or less the same average what has been done in the last 3 quarters, it will be that.

Understood, sir. And going forward, is it fair to assume a decline of, let's say, about somewhere around 10% to 20% every year going forward in that number?

See, recovery, I will put it differently, not per se about our bank or something like that. It is the efforts you have put in and the structure you have put in for the recoveries. Still the book is always there, but some windfall happens when there is an NCLT resolution. So the thing is that if you are talking about the regular recoveries, you may expect better than that, because there are 3 baselines. One is the normal regular recovery, another one is when you get through NCLT or some the bigger resolutions. So bigger resolution, generally we -- we expected actually last week of -- last 15 days of the last quarter, but that has not materialized, but will be materializing in this quarter. But at the same time, we do not consider in our forecast, because the thing is that we have to concentrate upon the cases which are in DIP, or maybe the SARFAESI actions, and taking even the smaller loans are there, where recovery agents you deploy and take possession of the cars or maybe the house and then you try to put into auctions and all. Actually, we have strengthened those systems, and that is why we are confident that this portion of the recovery you will see better than expected. And related to the bigger ones, we still have there. I think that will be yielding going forward as well for maybe a few quarters and years.

Mr. Sonje, please rejoin the queue for more questions. Next question comes from the line of Gaurav Jani with Prabhudas Lilladher.

Congratulations. Just firstly on the LDR side, we have had liquidity benefit due to the CRR cuts. LDR kind of shot up by about 4.5% sequentially. So what kind of LDR levels are we looking at sustainably given the fact that capital we are pretty comfortable at about 14% to 15%. So that's the first question.

Yes. See, there are 2 types of LDR. One is domestic, another one is as a global consolidated. Typically, let us discuss first with the domestic one. Compared to the domestic one, we are in the range below 81%. And if you see the banks today and the efficiency parameter-wise, I think 80%, 81% is a very good comfortable range for everybody, all the stakeholders. So absolutely, that is what and we have achieved it. The second one is compared to -- because the foreign, you will be knowing that including the [ GIFT City ], generally, you will see more of the CD ratios with them, LDR. So then that is the reason, globally, if you see, it is somewhere 82%, 83% range. But otherwise, we are in a comfortable range. We do not foresee any issue in that. That gives a good efficiency with that range subject to that you deploy the assets qualitatively and quantitatively in the right direction. So I think that LDR, we do not want to go beyond certain limit, maybe 0.5% to 0.75% here and there.

Okay. Understood. Secondly, on the OpEx side, right? I mean, last 2 years, OpEx growth has been kind of low. So for the next 2 financial years, what kind of an OpEx growth do we factor? I mean, should it be in tandem with the loan growth?

OpEx growth. Operating expenditure. Yes, actually, we have taken a few steps here. That is actually we cannot say much. But then probably you will be seeing the -- like one is the Project Muskaan itself, where we are moving towards the efficiency, point number one. Point number two, there are a few more which we have taken on the ATMs and similar sort of equipment and other things, where we see that certainly, because when you are in an economy where GDP is growing, everything, so the cost of your people, the cost of your physical infrastructure increases. But then what we are looking at is actually we have identified and identified further that what are the parameters where we can have a control. So specifically those parameters, the entire team is working upon. But going forward, on an operational expenditure, once we move towards more of a -- like our ED, Shri Nitesh sir, was telling you on the digital push and the digital infrastructure platform, which the bank has built. Once it is put to use to a good capacity, I would even not say 90% to 100%, but even if it is put to 60% to 70%, you will see good cost cutting along with the risk mitigation. So I think probably -- and we do have a plan. Now I will come back to one more point, because being an investor, you will have a noting of it. So we have a plan of opening some 75 branches this year itself. And going forward, we want to further open 200 branches. So that is also a cost, even then we would like to come down and bring it into the control quarter-to-quarter.

Mr. Jani, please rejoin the queue for more questions. The last question comes from the line of Siddharth Rajpurohit with Systematix Group.

Congratulations to the team for a good quarter. I have 2 questions, sir. One is, what is our excess standard asset provision that we hold? And second is this project finance provision rules have kick in. So how do you see that impacting the provisions? And are you seeing any incremental increase in the private CapEx that is coming out? Or when do you see it will pick up?

Okay. So I'll take the first one, which is on the excess standard asset provisioning. So I don't think it's fair to look at it from a point of an excess standard asset provision, because what you're trying to do is bridge the gap between ECL and the current level of provisioning. So that is something that even in the last couple of quarters, we've been saying that we will make standard asset provisioning. And giving you the excess standard asset provisioning would also give you an indication of what could be the potential ECL-related provisioning, which we've not necessarily put in the public domain. So we are comfortable in terms of the excess -- in terms of the standard asset provisioning that we hold. And we will continue to look at it as and when the RBI releases the final ECL guidelines to see whether we need to increase or whether we need to maintain at the same level.

Second, on the project finance team?

Project finance, I don't think we are expecting much of an input really.

So, not much. So in project finance, not much provision has been made during this quarter. So of course, there are some project finance where recently we have done it. So accordingly, the provisions have been made as per the norms. But that is not making much of a provision on the provision side.

In fact, what you are trying to understand is that what is the impact of this new project finance guideline on provisioning?

Yes, sir.

So for existing portfolio, there won't be any impact, because either COD has been achieved or COD has been extended. For only new cases where COD is getting extended, this will have some impact. So this will have an incremental impact on it, not -- so that will keep on moving based on new project which comes to us in our portfolio and the extension is required to be given. This will not be anything significant.

So thank you so much to all our investors, analysts. And we are always thankful to you for being along with us. And we always appreciate whenever you tell some lacking from our side and something where we have to improve. So we always welcome those suggestions from you and you have all our mail IDs and everything. And certainly, we can have a meeting as well. But then from the Union Bank and all senior management sitting here, we welcome those and anywhere we would like to take further improvements, because you will have some critical eye to make the analysis of the bank and tell us where we can a bit more improve upon. We are in that process. But certainly, we value your suggestions, we value your proposition. And thanks to you for being along with us today. Thank you so much.

Thank you. On behalf of Union Bank of India, that concludes this conference. Thank you for joining us. You may now disconnect your lines.