Summary:
City Union Bank (CUB) expects a credit growth boost in the coming quarters, with nearly 50% of its loan portfolio exposed to sectors that are likely to gain from recent GST rate cuts. The bank’s management indicated that MSME, agriculture, and trading segments — key drivers of its book — are poised for improved demand.
GST Cuts to Drive Credit Pickup
Managing Director & CEO N. Kamakodi said the lender is actively assessing the impact of GST rate reductions and will share a revised growth strategy along with its Q2 FY26 results.
“Overall, this is extremely positive compared to whatever we started the year with,” Kamakodi said. He added that at least half of CUB’s loan book stands to benefit directly from the policy changes.
Outlook for System-Wide and Bank-Level Growth
- Industry-wide credit growth is now expected to improve from the earlier 10–12% range to the low teens in FY26.
- For City Union Bank, growth is projected to remain 2–3% above industry levels, in line with its long-term strategy.
- The bank reported steady loan growth in Q1 FY26, with momentum continuing into the current quarter.
MSME Segment Remains Key Growth Driver
- The MSME segment accounts for nearly 40% of CUB’s loan portfolio.
- Demand from MSMEs is expected to rise sharply following GST reductions, further strengthening the bank’s growth trajectory.
Margins and Profitability Outlook
Despite short-term pressures, the bank’s margins have remained resilient. Management expressed confidence in sustaining them throughout FY26.
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