City Union Bank Surges 10% on Strong Q2 Earnings of ₹285 Crore

City Union Bank shares surge on strong earnings

City Union Bank Surges 10% on Strong Q2 Earnings of ₹285 Crore City Union Bank Ltd. shares surged by up to 10% on Tuesday, October 22, hitting the upper circuit following a strong earnings report. Global brokerage Macquarie has assigned an ‘Outperform’ rating to the stock with a price target of ₹185, indicating a potential 22% upside from its previous close. Macquarie highlighted the bank’s improving growth momentum and expected return on assets (RoA) of 1.5-1.6%, despite higher credit costs, making the risk/reward profile attractive.

Investec also issued a ‘Buy’ rating, setting a higher price target of ₹200, suggesting a possible 32% increase from Monday’s closing price. The brokerage praised the bank’s performance, noting improvements in growth, profitability, and asset quality during the second quarter.

For Q2 FY25, City Union Bank posted a net profit of ₹285 crore, a 1.6% year-on-year increase. Its net interest income (NII) rose 8.2% to ₹582.5 crore, compared to ₹538.4 crore in the same period last year, driven by increased lending activity and stable margins. The stock has gained about 30% over the last year and opened today at ₹162, up nearly 10%.

City Union Bank Surges 10% on Strong Q2 Earnings of ₹285 Crore The domestic equity market continued its upward trend in early trade, supported by buying in technology and banking sectors. By 9:55 AM, the S&P BSE SENSEX had risen 223.90 points (0.28%) to 81,375.17, while the NSE NIFTY50 gained 58.20 points (0.23%) to reach 24,839.30.

On the NSE, UltraTech Cement, Titan Company, ICICI Bank, Infosys, and Power Grid were the top performers, while Tata Steel, BEL, BPCL, Bajaj Auto, and Hero MotoCorp were among the biggest laggards. City Union Bank’s shares jumped over 11%, trading at ₹167.50 on the BSE, following its Q2 FY25 earnings report showing a net profit of ₹285.2 crore, a 1.6% increase year-on-year. The bank’s net interest income (NII) grew by 8.2%, and its asset quality improved, with gross NPAs falling to 3.54% from 3.88% in Q1 FY25.

Ambuja Cements announced its acquisition of Orient Cement Ltd. (OCL) for ₹8,100 crore, leading to a 1.5% rise in Ambuja’s stock to ₹580.10, while Orient Cement’s shares gained 2.5% to ₹360.90. Zomato shares were up 0.8% at ₹267.80 ahead of its Q2 earnings release, which is expected to show significant revenue and profit growth.

Foreign investors net sold ₹2,261.83 crore worth of equities on Monday, while domestic institutional investors net purchased ₹3,225.91 crore. The BSE MidCap index was slightly down by 0.14%, and the BSE SmallCap index dropped by 0.87%. Asian stocks dipped, and the US dollar held near multi-month highs as rising bond yields and a surge in gold prices suggested cautious sentiment ahead of the US election. In overnight US trade, the Dow Jones and S&P 500 declined, retreating from record highs as investors awaited earnings reports amid rising Treasury yields.

City Union Bank Surges 10% on Strong Q2 Earnings of ₹285 Crore City Union Bank (CUB) reported a slight 2% increase in profit after tax (PAT), reaching ₹285 crore for the quarter ending September 30, 2024, compared to ₹281 crore in the same period last year. Interest income grew by 10% to ₹1,434 crore in Q2 FY25, up from ₹1,304 crore in Q2 FY24, while non-interest income saw a 24% rise, amounting to ₹226 crore compared to ₹182 crore in the corresponding quarter.

The bank’s total deposits increased by 9% to ₹57,369 crore in Q2 FY25, compared to ₹52,714 crore in the same period last year, and total advances rose by 12% to ₹48,722 crore from ₹43,688 crore. As of September 30, 2024, the bank’s total business stood at ₹1,06,091 crore.

City Union Bank also improved its asset quality, with gross NPAs dropping to 3.54% from 4.66% a year earlier, and net NPAs decreasing to 1.62% from 2.34%. The provision coverage ratio (PCR) was 75% (including technically written off accounts) and 55% (excluding them), with the bank working to improve these ratios further.