City Union Bank Limited — Investor Meet, 05-02-2025: Analysts/Institutional Investor Meet/Con. Call Updates

**Financial Performance:** City Union Bank reported notable financial improvements for Q3 FY25, achieving a year-on-year growth in gross advances of 14.6%, increasing from INR 44,017 cr to INR 50,409 cr. Deposits rose by 11%, reaching INR 58,271 cr. The bank posted a PAT of INR 286 cr, a 13% increase from INR 253 cr in Q3 FY24. Operating profit surged by 20% to INR 436 cr. The cost-to-income ratio remained stable at 46.58%. Asset quality improved, with gross NPA decreasing to 3.36% from 4.47% YoY, and net NPA dropping to 1.42% from 2.19%.

**Future Outlook and Growth Drivers:** Management anticipates maintaining a credit growth rate of 12-14% over the next two to three years, primarily driven by MSME and secured retail products. The focus remains on maintaining robust asset quality and supporting credit growth through better deposit acquisitions.

**Order Book and Operational Updates:** The bank's new digital lending initiatives have supported consistent growth in core advances, with expectations for continued expansion in the retail segment, although it currently contributes just 2% of total advances.

**Analyst Q&A Insights:** Analysts sought clarification on the impact of new retail products and branch expansion. Management confirmed a cautious approach to unsecured retail lending, ensuring that 90% of new credit card customers will be existing clients. The bank is on track to open additional branches primarily in Northern and Western regions.

**Market or Regulatory Updates:** Management remains cautious but optimistic about the asset quality outlook, expecting slippages to remain below recoveries in the near term.

**Strategic Focus Areas:** Strategic themes include focusing on MSME lending, improving operational efficiency through digital means, and gradually expanding retail offerings while maintaining asset quality.

**Investor Insight:** Given the positive improvements in financial health, earnings growth, and strategic direction, maintaining a 'buy' stance seems appropriate, considering the sustainable growth trajectory and robust recovery trends.