Shares of City Union Bank Limited surged over 8 per cent in Tuesday’s trade after the lender reported a strong set of Q4 FY26 earnings, alongside announcing a bonus issue and a dividend payout. The stock climbed to an intraday high of Rs 293.55, up 8.18 per cent from its previous close of Rs 271.35, before trimming some gains to trade around Rs 283.35.
Strong Q4 performance lifts sentiment
The rally came on the back of robust quarterly numbers. The bank reported a 30.9 per cent year-on-year jump in net interest income (NII) to Rs 785.8 crore in Q4 FY26, compared to Rs 600.3 crore in the same period last year. On a sequential basis, NII rose 4.47 per cent.
Net profit also showed healthy growth, rising 24.86 per cent year-on-year to Rs 359.56 crore, while growing 8.25 per cent quarter-on-quarter. Earnings per share (EPS) for the quarter stood at Rs 4.84, up from Rs 3.89 a year ago.
Bonus issue and dividend add to cheer
Adding to investor enthusiasm, the bank’s board approved a bonus issue in the ratio of 1:3, meaning shareholders will receive one additional share for every three shares held.
The lender also recommended a final dividend of 200 per cent on the face value of Re 1, translating to Rs 2 per share for FY26.
FY26 growth remains steady
For the full year, the bank reported a 22.2 per cent increase in net interest income to Rs 2,829.8 crore, while net profit rose 18.03 per cent to Rs 1,326.2 crore. Over the past five years, revenue and profit have grown at a compound annual growth rate (CAGR) of 9.11 per cent and 17.47 per cent, respectively.
Asset quality and margins stable
Operationally, the bank maintained stable performance across key metrics. Net Interest Margin (NIM) stood at 3.87 per cent, while Return on Assets (ROA) came in at 1.56 per cent and Return on Equity (ROE) at 14.15 per cent.
Asset quality remained under control, with Gross NPA at 1.91 per cent and Net NPA at 0.68 per cent. The Provision Coverage Ratio (PCR), including technical write-offs, stood at a healthy 84 per cent, reflecting prudent risk management.
Brokerages remain positive
Brokerage firm Macquarie Group has maintained an “Outperform” rating on the stock, setting a target price of Rs 330, implying an upside potential of over 21 per cent from previous closing levels.
The brokerage highlighted the bank’s strong finish to FY26, supported by steady earnings and higher net interest income. While credit costs have increased, they are being used to strengthen provisions and improve balance sheet quality.
Looking ahead, the bank has guided for high-teens growth in FY27, with stable margins and continued focus on prudent lending. Analysts believe this combination of steady growth, improving asset quality, and shareholder-friendly actions like bonus and dividend could keep the stock in focus.
