Why did Union Bank of India shares fall over 8.5% today?

Synopsis: Shares fell over 8.5 percent after weak margin trends, falling net interest income, and a sharp decline in treasury income despite profit growth and stable asset quality.

The shares of this company, which offers a wide range of financial services, including personal banking, corporate loans, and digital banking (using the Union Bank Online portal) to over 16 crore customers, came into focus after weak Q4 numbers.

With a market capitalization of Rs 1,37,137 crore, Union Bank of India’s shares on Thursday made a day low of Rs 177.45 per share, down 8.5 percent from its previous day’s close price of Rs 177.45. The shares of the company have given a return of 448.9 percent in the last five years.

Results Highlights

QoQ View: Net interest income from Rs 9,328 crore in Q3 FY26 to Rs 9,406 crore in Q4 FY26, up 0.8 percent QoQ. Operating profit jumped to Rs 7,955 crore from Rs 6,942 crore, up 14.6 percent. Net profit increased to Rs 5,316 crore from Rs 5,017 crore, up 6 percent QoQ.

YoY View: Net interest income fell from Rs 9,514 crore in Q4 FY25 to Rs 9,406 crore in Q4 FY26, down about 1.1 percent YoY. Operating profit rose from Rs 7,700 crore to Rs 7,955 crore, up 3.3 percent. Net profit increased from Rs 4,985 crore to Rs 5,316 crore, up 6.6 percent YoY.

Fiscal Year comparison: Net interest income declined from Rs 37,214 crore in FY25 to Rs 36,659 crore in FY26, down about 1.5 percent YoY. Operating profit also fell from Rs 31,090 crore to Rs 28,620 crore, a decline of nearly 8 percent. 

In contrast, net profit rose from Rs 17,987 crore to Rs 18,697 crore, up around 4 percent YoY, indicating improved bottom-line resilience despite pressure on core income and operating performance.

The Board of Directors has recommended a dividend of Rs 5 per equity share, which is 50 percent of the face value of Rs 10 per share, for the year ended March 31, 2026, subject to necessary approvals.

Business Performance

Business and Deposit Growth: Bank reported steady expansion in overall operations, with total business rising 5.78 percent YoY to Rs 23,85,502 crore as of March 31, 2026. Gross advances grew 9.74 percent while total deposits increased 2.72 percent YoY to Rs 13,06,891 crore, indicating balanced growth between lending and liabilities.

Asset Quality, Capital Strength and Returns: RAM segment grew 12.56 percent YoY, driven by strong retail growth of 16.75 percent and MSME growth of 18.75 percent, forming 57.49 percent of domestic advances. Asset quality improved with Gross NPA at 2.82 percent and Net NPA at 0.48 percent, while capital adequacy remained strong with CRAR at 18.10 percent. ROA and ROE stood at 1.25 percent and 15.86 percent respectively.

Key concerns in Q4

Margin and Income Pressure: Net Interest Margin declined to 2.64 percent in Q4 FY26 from 2.87 percent in Q4 FY25, reflecting pressure on profitability. Net Interest Income also fell year-on-year to Rs 9,406 crore from Rs 9,514 crore, while full-year NII dropped 1.49 percent, indicating muted core income growth.

Profitability and Cost Concerns: Operating profit declined 7.94 percent year-on-year to Rs 28,620 crore in FY26, impacted by a 5.93 percent rise in operating expenses and a one-time provision of Rs 700 crore. Return on Equity also eased to 18.04 percent from 19.07 percent, showing a moderation in return ratios.

Other Weaknesses in Performance: Deposit growth remained relatively slow at 2.72 percent YoY, while treasury income fell sharply by 61.36 percent to Rs 636 crore in Q4 FY26. These factors, along with weaker non-core income streams, added pressure on overall quarterly performance.

About the Company

Union Bank of India (UBI) is a leading Indian public sector bank, headquartered in Mumbai and established in 1919. It offers a wide range of financial services, including personal banking, corporate loans, and digital banking (using the Union Bank Online portal) to over 16 crore customers. The bank is majority-owned by the Government of India.

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