Key Takeaway:
- Profit and Income Surge: Net profit jumped 25% with 30.9% increase in net interest income.
- Shareholder Rewards: The bank announced a 1:3 bonus issue and a ₹2 per share dividend.
- Improved Asset Quality: Gross NPA fell to 1.9% in this Q4 report.
City Union Bank on Monday announced a one-for-three bonus share issue and a Rs 2 dividend after reporting a 25% rise in fourth-quarter profit, driven by higher interest income and improved asset quality.
Bank Unveils Bonus Issue, Dividend Plan
The lender said it will issue one bonus equity share for every three fully paid shares held by investors. The record date has not been announced, but shares will be credited within two months of board approval.
The bank also recommended a dividend of Rs 2 per share for the financial year 2025-26. The payout remains subject to shareholder approval at the upcoming annual general meeting.
In a regulatory filing, the bank said the moves reflect its effort to reward shareholders while maintaining capital strength.
Profit Jumps on Higher Interest Income
City Union Bank reported a net profit of Rs 360 crore for the January-March quarter, up from Rs 288 crore a year earlier. The growth was supported by a rise in core income.
Net interest income increased 30.9% to Rs 786 crore, compared with Rs 600 crore in the same quarter last year. The metric reflects the difference between interest earned and interest paid.
A banking analyst familiar with the sector said, “The strong growth in net interest income shows the bank is benefiting from stable lending demand and improved margins.”
Asset Quality Improves, Shares Rise
The bank’s asset quality strengthened during the quarter. Gross non-performing assets fell to 1.9% from 2.2% in the previous quarter, while net NPAs declined to 0.68% from 0.78%.
In absolute terms, gross NPAs stood at Rs 1,273.08 crore, down from Rs 1,320 crore, and net NPAs dropped to Rs 449.42 crore from Rs 469.34 crore.
Provisions and contingencies rose to Rs 120 crore, compared with Rs 78 crore a year earlier, indicating a cautious approach to risk management.
Shares of City Union Bank closed 3.31% higher at Rs 271.21 apiece after rising as much as 4.57% during the session. The gains outpaced the broader NSE Nifty 50, which ended 0.81% higher.
The stock has gained 52.89% over the past 12 months but is down 6.74% so far this year.
A market participant said investor sentiment was lifted by the combined impact of earnings growth, improved asset quality and shareholder-friendly announcements.
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