Union Bank of India (UNIONBANK) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Union Bank of India Earnings Conference Call for the period ended June 30, 2026. The bank is represented by the Managing Director and CEO, Asheesh Pandey; Executive Director, Shri Dhirendra Jain [indiscernible] other members of the top management. [Operator Instructions] Please note that this conference is being recorded. I now hand over the call to Mr. Ajay Bansal, Deputy General Manager. Thank you, and over to you.

Thanks, ma'am. Good afternoon, ladies and gentlemen. I'm Ajay Bansal, Head of Investor Relations. Welcome you all for Union Bank of India earnings con call for the period ended June 30, 2026. The structure of the concealing growth, a brief opening statement by a respected MD and CSR, and then the floor will be open for interaction. Before getting into the con call, I will read out our usual disclaimer statement. I would like to comment that to statement that may be discussed during the investor interaction may be forward-looking statements based on the current expectations. These statements involve a number of risks, uncertainty and other factors that cause actual results to differ from the statement. Investors are therefore requested subject this information independently before making any investment or other decisions. With this, I now put [indiscernible] for his opening the remarks. Thank you, and over to you, sir.

So thank you. Thank you, Mr. Bansal. With great pleasure, I welcome on our analysts and the investors on this con call to Union Bank of India, [indiscernible] and financial results announcement for the quarter ended 30th June '26. So to have a more Q&A and understanding, I would not go much. But as all of you know. So to just set a context that what the economy we are in and what are the disruptive situation happening across the world and how it is impacted [indiscernible] but at the same time, our country is well poised with the various rating efforts taken by the policy makers, the government of India, all regulators use of bank and the [indiscernible] governments as well. So I think we are resilient and we are in a position to navigate the impact of oil prices changing ideas, logistics, currencies and rep movements. So I think with this, if I recall the art in [indiscernible] is fourth, but actually it is like the arming call, which we had the Investor release for last 3 quarters so we were very clear in communicating that your bank is working upon 5. First is efficiency. Second is robust, is quality and sustainable growth. for this profitability and is customer centricity and ease of doing business for staff. And equally, we are having rates to all these 5 parameters and I think the improvements which you must be observing quarter-to-quarter from December '25 onwards, I think is aligning to this 5 wheelers only. So we had also informed you that your bank has done, like the bank is now maybe a restructuring this launching in some of the things like on technology, on operations, project Moscone are running, we have, which has now we are getting the real good due use of it. Meanwhile, we have created certain verticals like ecosystem banking. So public sector banking, I think we could achieve within the last 6 to 7 months. Now that in time sourcing of business is separate where we are having 1,200-plus people as ecosystem banking vertical, added by CGM. I am then having 7, 8 gels and then 14 and then around 200 people, 118 centers and 12 hubs so these people are either related to at work or not relative to the branch work. We are total in the relationship management and that is why the CASA, we have in a position to sustain from June 25 or March 25 or September 5 levels. And if you speak certainly, even for the June quarter, very well that -- when we talk about the low cost deposit, we talk about CASA. So CASA, even in the June quarter, I can give you the average figure is around INR 24,000 plus crores average cost we have maintained during the quarter. And RTP, have maintained average as a INR 17,000 crores total put together INR 41,000 crores. Around we have shut off around INR 18,000 to INR 20,000 crores of an deposit, but she doesn't mean that we are not taking the deposit -- we are taking the deposit, but in the last. The first thing is that we have a capital base of 18.46 percentage robust capital. And March '25 somewhere and that we were at the 74% level. And today, we had a 86% level. It around 12% growth. So it gives a good sort of a lesion that is why efficiency is maintained and to come with some better figures as we promised to all our investors earlier -- so even not -- I would not like to give you that, but even today, our average cars, [indiscernible] of figures are better than doing a CASA figures because that is what I'm saying about the vertical, which we have created. So at the stations we are doing around 10,000 to 15,000 per day increased 100. So then you can think because the fee-based income and other fees are generated through all these activities. And almost in a quarter, more than 200, if I'm not wrong corporates, we are gating so that our stickiness as in the plus made told by our CFO, he will again be will but it is around 95%, somewhere to 99% stickiness in advances in saving in the current. So I think that is a good color, which gives that we are -- the bank is now what they said is working upon the average figures. Now in this quarter, we also got excellence some large IGF excellence in governance and compliance, TransUnion beard for best data quality bank, [indiscernible] cybersecurity team and economic times enterprise security winners for data privacy. So I think these are something because we believe that business first and compliance areas. If we plan to grow another INR 5 crore, INR 6 lakh crores from here we should have been under very robust base rather than only on the superficial foundation. So that is the reason we are working a lot. We have taken a centralized vehicle to our some of the presentation is really clear on the things which we have done last 6, 7 and 9 months. And we have to in each of our enlisted presentation call that what we have is we have taken. And we also said that it may take 9 months to 1 year time to get into it. And the first thing is that this is the highest sale profit even in March, we to highest ever profit, highest ever dividend. And even the Q 4 ROA was 1.36%. So last 3 quarters, we are maintaining the ROA of 1.36. This time, yes, cost to income we told we are working hard on it and almost 500 basis points, a 510 basis points, 5 percentage points we have come down. OP is not high for the bank for this crossing 8,000 cons. Even the NIM is the highest level [indiscernible] and the other ratios, certainly, you have our presentation, the GNPA, NPA levels are again one of the best. So now I can say that your bank has come to a real foundation where we are now in a position to tick forward very nicely. Coming to the growth in advances and other places, you have seen, we have got a good growth. First quarter is slightly sluggish for everybody. But the first quarter is also a banking industry generally gives a negative color on the [indiscernible] and the SMA position, but then your be I think the rest of the numbers, even 1,000 common in the March figures, around INR 2,800-odd in SMA-1 to above INR 5 crores. I think that's also 1 of the good core which keeps 99% around silly score. So we are shifting from lower single school to offer sales. So that is what you will see in the presentation. Even INR 25 crores and above when we talk about the external rating, so we are maintaining that. So we do not want to compromise on the quality of any other cost. And but at the same time, the industry level growth plus 1%, we aim forward. And certainly, we look for now earlier on, we said we would like to differently. But then from here, we would like to go up on the -- so the funding is for sure and improving the explanation from here [indiscernible] And coming to the deposit, it is not like deposits we are not taking because there are various maturities over the year is spread over the year. This time also, we have taken INR 30,000 crores, INR 50,000 crores of deposits, but our first choice is [indiscernible] So this is where we are trying to build because actually because of this county only the deposit cost has reduced by 18 bps. I think that is the novel feature for this quarter, which has also helped in another important parameters. So I think with this, I would like to give the platform to all the investors, and you may ask the cores and we'd like to answer that during the phone call itself.

[Operator Instructions] We'll take the first question from the line of Mahrukh Arianna from [indiscernible] Capital.

So my first question is on deposit growth. So you explained very well on how you've been shedding by deposits, but the gap between deposit and loan growth is quite wide for us now. So when do you see a pickup in deposit growth because the gap has to be bridged, right, at least to the sector level? So that's my first question. And my second question is on FCNR mobilization. How much do you think you can mobilize and what's been the mobilization so far?

Okay. So thank you so much because it is your bank, you are the investor. So how we -- are the custodian. So always I say to you, I know you for very long, and I just say like this. See, the reported growth is not set on an issue if we ask -- the CASA TD is an issue. So I think we are actually hitting on the draft level of the issue. And there itself, it is not like if we talk about bulk deposit hey, it will not give a good color.

The right set of currencies that, first, our own capital, we are sitting at 18.46% level per day. And if you see the June 25 or more prone the CD ratio was 74% in -- so 12% and how 1 percentage is Caputo 1% in numbers and several [indiscernible]

Correct. No. So 10,000. So you can think of around 1 lakh, we could be straight away from our capital so that is the first more point. The second 1 is that we also in my community or into an introductory brief, we are working a lot hard on the CASA and RTD and stickiness, which we have one so that is also not an issue. And the one deposit it is not like we are not taking every quarter, even in this quarter, it is around 1.3 how much is the

[indiscernible] And even Q1, it was more than one, let say, INR 5,000, INR 139 crore, which was getting mature. So we are taking it the thing is that our first priority is very, very clearly the first price is Catan RTD. But yes, going forward, as we grow.

We need to -- we will be taking through already we are taking, we will be taking. But then we'll be taking where we know of the CASA and to an extent that's supposed only that we will be taking will deposit because the deposit to the total deposit ratio was around 27-odd percent. Which has come down to 19-odd some. So it means around 7.5% to 7.9% we have reduced and that the reason the efficiency is coming on. and we follow it did not see. We have to see the total deposits. So going forward, our aspiration really if we take 1 year, 2 years, 3 years down the line, but to bring a deposit on 15 percentage points. So that will give more stability to the bank on the funding part, on printing for on the cost of deposit part. And certainly, the us look the most important piling, which is NCR and NSC basis point, and our board as 17%. RBI threshold is 100% and 1 basis point means INR 2,000 crores approximately, roughly so 21% is around INR 42,000 to INR 2,000 crores, we are in a liquidity position compatible. So we are founding upon that. So suddenly, we have gone with the level where we required, we have taken the deposit. But going forward, certainly, because now CBCs also, I think, our locate optimized. So going forward, we're taking the deposits. And certainly, it will be -- when we say the advances, it will continue 12% to 13% plus some level because we would like to grow with the industry plus something on the credit growth. So certainly, in similar minus 2% on the deposit growth will continue. Coming to SCR, I think this is also counted question to the first one, the FCNR, we have already done [indiscernible] up till now and we have not done any leveraging up to now, but we are in talk and we'll be going forward with that. And we aspire to not outside, but it is an achievable, we will be a position to garner [ 1.5 billion to 2 billion ] in forward in September. So this is the color on the FCM and OFC around INR 200 million to INR 300 million on that growth. So this is a total plan on the scheme given by that a Bank of India and the comment.

[Operator Instructions] Next question is from the line of Ashok Ajmera from Ajcon Global.

Thank you for giving this opportunity. and compliment to you Asia and the entire team for a good set of numbers, especially on the profitability front. Even in the first quarter, also your net profit rather improved it by which is good hardening to note. And even the NIM is also very healthy as compared to the last quarter and even otherwise also. So my compliments on the Sir, having said that, I've got again the same one major concern is about the business growth, the overall business growth and especially -- which is linked with the deposit and rate growth. So the same question which Mark had asked about deposit trend, you said you are comfortable on capital efficacy wise. But sir, if you compare with the even industry also I think in the overall business growth as well as the credit, I think we are a little bit letting which was never used to be a phenomena 1.5, 2.3 years back in the union bank. So having said that, what can -- I mean, what can be done to increase the number because now you see even in the first quarter also some of the banks which have declared the results have given very healthy numbers of the credit and oversees also. So on this little more elaboration, a little more right kind of foresight from you would help in understanding the future of this bank. So these are my first question, sir. .

Okay. So thank you. Thank you so much, Ashok. On top that, we have already answered on the deposit growth to [indiscernible] and to all the investors. And we tell you when we talk about 1.5 million to 2 million on the F&R front how much it comes to Indian rupee possibly? Around INR 20,000 crores. So then certainly, you have a road map for this quarter itself because this is so September only. But then our main focus is the CASA. And I think let us understand in total [indiscernible] there are 3 factors: one CASA and other retail term because [indiscernible] So I think in CASA and retail, there is a huge growth in Union Bank of India. I think that is 1 notable remarkable feature quarter-to-quarter. You can compare from the March to June to September to December and to March in unit June. Even in the average, even the average, you can see there is a lot of improvement. So a stickiness in the press me to see our CFO is to stick in us in saying that is a stickiness lease, the average figures to 10 million figures at the quarter end. And I think I will request you to inform all the investors on that count. But let me tell you that all these things have to manage structurally many efficiently fund but then it cannot be endless. So going forward, we are seeking because it will take and certainly, you will see like , see, this was actually the anomaly, which was there, which we have tried to elective high and improve upon the efficiency. Now when you talked about the other banks also maybe the other organizations. And we compare to Union Bank. So like the cost to income, like the cost of deal was like the NII now and ROA. So where we could build the efficiencies. But then certainly, going forward, as we grow -- move from quarter to quarter in this year-end, you will see the same -- because we are in the industry under money will not come money will come in the market only and certainly, we are there to cater it. And when we say and when you talk about credit growth and certainly, the Q4 growth you have seen is one of the best it was around 7%. So there is no doubt in the growth on the credit front -- and certainly, the first quarter being a week. But going forward, even we have almost more than INR 1 lakh crore of a sanction, but not this work pipeline in the corporate itself. And one sector, we have now some of the platform scheme, we have come with the agri in the scheme. So we have come over schemes in the tin agriculture. So we are very sure that not only 11% to 12% or 14%, but we aim to move better than 18% to 20% in the 3 factors going forward. And then the reason we sell well in deficit and but last quarter, we have sold a very good IBC this -- and we have moved to good income so that we are in a position to make in growth, and we have a good visibility on the growth -- so certainly, that credit growth and the deposit is allow in line with that.

So quite well taken deal. We are in vision of the bank and would definitely like to be in line with -- on every parameter at the other banking industry on the whole or rather do better. Having said this, there is a little concern on the cat side, because our recovery from the return of account in this quarter is almost half of the March quarter, which generally is a good quarter. I understand. And secondly, the provision NPA provision has also gone up substantially. INR 1,020 crores from INR 420 crores in the March quarter. And similarly, if you see the SMA 2 numbers, overall SMA numbers have come down as you said and as we can see but the SMA 2 has gone up by around INR 350 crores. So overall, do you see some kind of little stress in some of these MSME accounts or some other accounts. And something if you can give the information on the ECGLs new -- how much is the entitlement of your -- all the customers? And how much money has already been discussed on that?

Yes. Regarding the recovery, if you are fine, March quarter and this quarter, if you're looking at the March quarter, there was on bulk that I think everybody knows that the Supreme Court orders or on where we got a good recovery. If you remove that, more or less, we are in tune with that because already also we have explained it. The biggest cases are not coming out. Actually, there is nothing much in CLT and as more or less a ride. In seeing that pot. We are also having a lot like that only there is new things only we are trying to see that how to recover the remaining amount. So recovery that care seeing coming down. It just is not happening to the largest rent is also we have been controlling the pace to a great extent under there was not much stages so the recovery, whatever it is that we -- there is a good team, which is taking care of that. That is number one. Regarding strains, it is-was there. It is going. It is there, and it's going to be there because the MSME are depending on mainly on our economy. When the economy is ever very unstable conditions automatically, there will be on the investment portfolio. But 1 thing is it has been quite well managed by the bank and government aware products, which ECLs that we will be able to help the semi sector to a large extent. And if you look at our pricing investor also is on the... No value ticket, not any medium or high valiant there is not much the low-value ticket, which is more of a state sponsored teams only we have, which are all quite covered with -- recovered from the government also. And regarding COGS, if I can say that, we are expected to -- this was around the INR 200 to INR 15,000 crores on overall. And already, we have completed around 10,000 crude disbursement. So I think when we are talking about SMA figures, see, we are INR 1,000 crores less than the March figure. Generally, you will see high-teens in estates in the June quarter and -- but functionally, and we are good hard work in statically manage this impact also on asset quality. We are actually now on the SMA, which is INR 2,800 crore demo. So that is point number one. Point number two, our recovery is lower than the pet. I think that is also quite an important point, second point. In the first quarter itself, -- the second is that even if you review that the major 1 we scale and in the last quarter last year, had not cutoff. And still, I mean, not only that by putting our own money, we have put a INR 700 crore of the additional provision, which is no were or part of the properties or part of the this year. And this thing also, again, we have put it means total INR 800 crores. And I think any shareholder, investor or any stakeholder for debt, we the regulator or government of India, we feel good that when ACL guidelines have increased and we are going to move. Now only 4 months are over. And the bank has kept INR 800 crores exits. I think that is a very good sort of air due to each one of these stakeholders. As you know, one more thing I would like to -- because the CE is a very important part of the economy -- and we take this in seriously. And as what we have done to say for information to all the investors here listening to us because the government was also keen to the impact of ACA and other things happening on this MSME and also the resonances also very cautious. So we have done all 4 regional offices we have connected a mess any customer needs. And for almost 1 to 2 hours ranging from customers from 15 to and in all those needs, our people version has joined Chief Economist of the bank and one to one, as for their business, we ask them that what heat there, whether on the input cost fuel cost or maybe on the logistics cost or orders or delay to a lot or not. And we have combined that actually end we are working upon each account whether we have to give a home to them, whether we have to do faster renewal for them for [indiscernible] release measures have to be given immediately together ECLGS. So we see a just12,000 crores of sanction more and was 10,000. And certainly, I mean, time period here, it is there. So we are in a portion to cross going forward. a good amount. So that is the reason we did this is steady. And this is all we have done for 2 months, and it was like our regional head, [indiscernible] head, MLB MLPs that MSME loan point had and these all as we have set these people and then they have tried to set the cues. And we are trying to handle those SMEs with this. So the thing is that if there is a stress, it will come but proactively, we are engaging with our customers and ensuring that, that does not fit in to our union ranks. Over to you, as [indiscernible]

Just figure because I was -- in fact, I'm timing to that point only that out of the total, about 18,000 created growth, net credit growth in this quarter. I mean, INR 10,000 crores according to you has won in ECLGS divestment. .

That is not correct because ECLGS disbursement happens in DCC account. And it reduces your CC. So we have done a great let me also tell you that not only everything small people, even the big corporate contains in years. And why they have taken that they want to sit on cash. It is not that they are in stress. It doesn't mean that this INR 100 crore to be any other bank who are sanctioned more or less than this amount is cold, it is going to stream. But the thing is that [indiscernible] in a society which is much more informed much more calculated. And we don't want to take risk which has happened during with another period. Now when this scheme came and when we saw the heat on the input and other costs, they immediately took the benefit of this and took actual this was in all the role also was to go -- so there is some the Cs rather than -- so that calculation probably mathematics would not work here. letting 1,000 growth year, particularly than [indiscernible] or 9,000 has actually set off. It reduced our CC balances, and most of them are sitting on so that in case of an eventuality, it will be in a position to make good of themselves -- and also they don't want to live at much taking ECLGS on one hand then utilizing that money for some other hand and then coming into account those. So most of them, we also discuss independently -- when we did this exercise mix, we did this exercise oak across the customer base across India. So I think 2,500-plus MSME,e have done this exercise. So outcome is very clear. It is not that equation that we are thinking. It is all to and it is really the stage. It is on the in cloud, so then there are some recent because everybody now that after the March quarter, it comes with a repayment from antiaging comes so it is across -- but yes, no we have not all and cautiously non-ground and that dentition done around INR 3,000 or INR 2,500. But now it has lending because we wanted to abide by the regulatory gains. We don't want to do the business in Haribo and then become a non-comp -- so we have worked a lot in the last few months on the gold loan, agriculture and what other prescription-related and how to go about it.

[Operator Instructions] Next question is from the line of Kunal Shah from Citi Group.

Question was on Probi maybe like INR 1,000-odd crores of -- and same also dropped, and we see a much higher write-off as well. So is that a to do with the write-off or maybe the provision towards the right of penetrating return on because that quantum of years to be slightly higher as slippages have just been flat. But till we have almost INR 1,000 crores of NPA provisions.

So ease observing the decisions are almost flat Q-o-Q, but the write-off is higher and to maintain the gross NPA and to have the proper tax planning we need to write out. If you look at my Q1 number of write up, it is almost -- in this quarter, Q1 previous quarters, previous year Q1, the write-off amount is almost aligned.

[indiscernible] It will not continue because we...

It will not continue, Kunal. I would put it differently. If you see all our ratios, it is one of the best and also the profit is the 1 of the highest levels. So now everything is there, and certainly, we need to clean the balance sheet. So wherever possible, we take that stance of gaining the balance sheet. Even the 100 we have put additional so now it is on a last quarter of 7, this time 100 plus 1,800 crores we have put set aside for the eventuality of the ECS going forward. So I think this gives a very good color that. Yes, if providing would have impacted the profit and the ratios probably won't have been correct. The deferential would have been correct. But the question here is that we are and the NIM has improved to 2.8 all these issues are better and the highest, particularly for the Union Bank of India. So in keeping those in view, we also need to clear the balance sheet. And then certainly, when we hear the benefit more and more and we become more stronger, I think. And when we do recovery. So the recovery , if I take -- which is a minimum, which we have done this time is 750. So 75,000. So certainly, it will be around INR 4,500 crores to INR 5,000 crores in the entire year which is a new much more than the last year, though there was a key recovery, I say. But as far as total recovery is concerned, it's too much more than the. Our tax provision, we are doing fully. So it is around [indiscernible] So it is INR 169 crores of tax provision also we have done on the operating profit because we are the highest operating profit of INR 1,000 crores. So on that basis, around 21% we have taken and provide.

Got it. And the second question was when you look at cost of deposits because of the announcing ballot, which is down by almost there is some savings on cost of deposits is down by almost 18-odd basis points. but cost of funds is still steady. So we don't have that borrowing number. So was there anything on the borrowing side wherein cost of funds are still remaining generally flat at 4.7% during the quarter.

See, they have certain to bonds, which are of prior period, which had a higher cost. One we have shut off during this quarter or and in this quarter, again, I think we have INR INR 2,500 crores. And some of the going forward, you will see that is a blended rate. And we are already sitting on 18.74 18.4% of capital. So certainly, we want to reduce. And I think going forward, you will see both getting reduced.

So INR 2,500 crores reset the blended rate of 8.7% during the quarter.

Yes. It is that the call option will exercise.

Next question is from the line of Dixit Doshi from White Stone Financial Advisor.

Sir, my first question is last year, we had 0 PSLC income -- this year, there is a sharp increase in the fee-based income. So if you can mention how much we have done in the PSLC this quarter. That's my first question. Can you give some estimate about the ECL provision requirement from next year?

So PSLC last year, this quarter was 0 this year, this quarter is INR 217 crores. And as far as the second part of your question is concerned, ECL provisioning. Actually, we did the PSLC the last March on corresponding -- it was INR 100 crores, but then in a year, it will come but this time, since December quarter and March quarter, we worked a lot. So we had access that is where agriculture has sold or the second one in ECL is around INR 6,000 crores open. The total requirement is around INR 11,000, but we are carrying INR 5,500 crores of additional provisions diary required, which I think even if we take commented selling and other sales, but the one quarter, I think, but there is [indiscernible] for war for, I think, many quarters. So we can decide what maybe we have put in the balance sheet even even today.

Okay Is depending on INR 100 crores is total requirement, and you are saying that INR 5,000 crores we have already done. So that INR 5,500 crores includes this INR 8 rent. So around INR 6,000 crores is remaining?

Okay. [indiscernible] So are we planning to do more in the remaining 3 quarters this year is because we are saying that provision for NPA was a Q1 phenomenon and maybe in the next 3 quarters, provisions for NPA would be slightly less I would not go for it because see, now we require only INR 6,000 of. And INR 800 crores, we already have. So -- but we would like sustainable business growth, sustainable profitability and sustainable all efficiency ratio. This is our first rate and after that, even if we are remaining is something we keep on building. But now nothing is remaining only only now 3 quarters are there. And after that, not even see, 2 quarters are there because this has to be done similar in the 31st of March before that. No, because some firsts have been given. So all the banks move designed upon upon the approach they are adopting to handle this be intact. So I think we are very comfortable that.

Next question is from the line of Anand Dama from Nova.

And a very good set of numbers. So my first question is that I think you talked about the sales impact of 10 crores but what would be the annual run rate that you should see once I think we have demand on the first April 2026.

There was an annual impact as well, whether that will be 5 to 610 basis points, 5 basis points. How much have you assessed that's going to be annual credit cost at when we talk so because of solar what is that. As in other activities in the Westend, how much intent help remove from -- in terms of credit is a question that. Yes, absolutely local the thing is that what we are saying 11,300 is putting on both and as well as on the side putting more and then ongoing, it will be like the stages at.

Can have both positive and depending upon your portfolio.

Yes. So the thing is that we are actually. Right now, we are working upon that. And that is why we could contain our steel this even INR 2,800 crores. Okay, you can tell some basis even if we absorb the impact in year 1, which is from INR 181 13, it would just go around to INR 17.5 crores. Even then we will be very comfortable. And going forward, of course, we have provision of adding back each year, and we can face it out over the next 4 years. So in any case, they will not be once you have done -- then on the ongoing basis post bicode.