City Union Bank shares surged 12 percent during the morning deals as the private sector lender's earnings show for the quarter was above expectations on October 22.
The bank posted a net profit of Rs 285.2 crore for Q2 FY25, a 1.6 percent rise from ?280.6 crore in the same period last year.
Net interest income climbed 8.2 percent on-year to Rs 582.5 crore, up from Rs 538.4 crore, building on the 4.5 percent growth seen in the first quarter of FY25. The growth in NII was driven by higher lending and steady interest margins.
At 9.40 am, shares of City Union Bank were quoting Rs 168.78 on the NSE, higher by over 12 percent compared to the previous session's closing price.
International brokerage Investec maintained its buy call, with a price target of Rs 200 per share, indicating a 33 percent upside. The Q2 results were better across all metrics: growth, profitability, and asset quality.
This is the first quarter wherein all three metrics have shown improvement. As growth picks up, the pre-provision operating profit-to-assets ratio should improve from 2.3 percent to its long-term average. This ratio will also see improvement upon further NIM improvement.
International brokerage Macquarie reiterated its 'outperform' rating on City Union Bank, following its earnings show for the quarter ended September. While the profit for the period was in-line, coming in at Rs 285.2 crore for the quarter, Macquarie noted that the growth engine has finally 'turned on'.
The brokerage expects that the ROA will remain at around 1.5 to 1.6 percent, despite higher credit costs. It expects to see steady recoveries.
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