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Synopsis: City Union Bank (CUB) shares surged by over 12.5% after the bank reported its Q2 FY25 results, highlighting robust growth across multiple financial metrics. Non-interest income increased by 24%, and total deposits grew by 9%. The bank also improved its asset quality, with a reduction in both gross and net NPAs. Despite the positive financial performance, experts recommend caution, advising against creating fresh positions at current levels. The bank's stock trading volume saw a sharp uptick, reflecting heightened investor interest.
City Union Bank (CUB) shares witnessed a sharp rise of over 12.5% on Tuesday, hitting a day high of Rs169.65. The surge came after the Tamil Nadu-headquartered private sector bank reported its financial results for the second quarter (Q2) of the fiscal year 2024-25, revealing solid performance across several key financial metrics.
Financial Highlights of Q2 FY25
Non-Interest Income Growth: CUB reported a 24% increase in non-interest income, which rose to Rs226 crore. This boost was attributed to improved income from services such as processing fees, commissions, and other bank charges.
Income and Profit Performance: The bank’s total income grew by 12%, while interest income was up by 10%. Operating profit saw an 11% rise. However, profit after tax (PAT) witnessed a more modest increase of 2%.
Asset Quality Improvement: The bank demonstrated a marked improvement in asset quality. The gross non-performing asset (NPA) ratio dropped to 3.54% from 4.66% a year earlier, while the net NPA decreased to 1.62% from 2.34%. This improvement signifies better credit management and reduced defaults.
Deposit and Advances Growth: Total deposits surged by 9% to Rs57,369 crore, while total advances expanded by 12%, reaching Rs48,722 crore. The Credit Deposit (CD) ratio stood at 84%, reflecting a balanced approach in lending and deposit mobilization. CASA (Current Account Savings Account) ratio was 29%, showing a stable low-cost deposit base.
Trading Volume and Market Capitalization: The trading volume on the Bombay Stock Exchange (BSE) saw significant activity, with around 12.29 lakh shares traded, far above the two-week average of 49,000 shares. The bank’s market capitalization was approximately Rs12,280.34 crore.
Branch Network: City Union Bank continues to expand its reach, operating 812 branches across 16 states and three Union Territories (UTs) in India.
Expert Insight
Kkunal V Parar, Vice-President of Technical Research and Algo at Choice Broking, advised caution despite the positive results. He noted that the current risk-reward ratio is not favorable, suggesting that investors should avoid creating new positions at the present stock levels.
Disclaimer: The information provided is for educational purposes only and should not be construed as investment advice. Market trends can fluctuate, and readers are advised to conduct thorough research or consult financial experts before making investment decisions.
