City Union Bank stock spikes over 9% to hit a 19-month high on healthy Q1 earnings

Shares of City Union Bank surged significantly in today’s intraday trading following the release of the company’s June quarter results, which were announced on Friday after market close. Investors responded positively to the report, particularly noting the reduction in provisions.

For Q1 FY25, the bank reported a net interest income of Rs. 545 crore, up from ₹523 crore in Q1 FY24. Non-interest income slightly increased to ₹192 crore from ₹191 crore in the same period. However, gross profit declined to Rs. 373 crore from ₹414 crore year-over-year.

The bank made a provision of ₹109 crore as of June 30, 2024, a decrease from ₹187 crore in the corresponding period last year. Profit after tax (PAT) rose to ₹264 crore in Q1 FY25 compared to ₹227 crore in Q1 FY24.

Total deposits grew by 6% to ₹54,857 crore from ₹51,655 crore in Q1 FY24. The CASA ratio stood at 30% of total deposits. The cost of deposits increased to 5.72% for the quarter ending June 30, 2024, up from 5.36% in the same period last year, reflecting policy rate hikes.

Total advances rose by 10% to ₹46,548 crore from ₹42,405 crore in Q1 FY24, with a credit deposit ratio of 85%. The yield on advances increased to 9.59% from 9.53% year-over-year, driven by policy rate adjustments.

Regarding asset quality, the gross NPA ratio improved to 3.88% as of June 30, 2024, from 4.91% in the same period last year. The net NPA ratio decreased to 1.87% from 2.51%. The provision coverage ratio (including technical write-offs) was 73%, while the PCR without technical write-offs stood at 53%.

The bank’s capital adequacy as of June 30, 2024, as per the Reserve Bank of India's (RBI) guidelines on Basel III norms was 23.58%, and Tier-1 capital adequacy was 22.55%, well above regulatory requirements.

Following the release of the June quarter results, the stock began today’s trading session with a gap up, opening at ₹163 per share, compared to the previous close of ₹159.80. It then climbed further during early trading, reaching a 19-month high of ₹174.80 per share, gaining by 9.4%. 

After witnessing a prolonged period of downward pressure from December 2022 to March 2024, the stock rebounded in the subsequent months, achieving a cumulative gain of 26% to date.

City Union Bank Ltd., India's oldest private sector bank, was established on October 31, 1904, and is headquartered in Kumbakonam, Tamil Nadu. The bank primarily focuses on lending to the MSME sector, retail, and wholesale trade and has a diverse asset profile. 

It offers both short-term and long-term loans to the agricultural sector, aligning with its core business strategy.

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