Lionheart Holdings

For FY24, City Union Bank reported PAT of INR 1,016 crores, up 8% year over year, and Q4 FY24 PAT of INR 255 crores, up 17% year over year. Total business stood at INR 1,02,138 crores as of 31 March 2024; deposits were INR 55,657 crores, up 6% QoQ, and advances were INR 46,481 crores, also up 6% QoQ. Gross NPA improved to 3.99% from 4.47% in Q3 FY24, net NPA improved to 1.97% from 2.95% a year earlier, ROA was 1.52% for FY24 versus 1.46% last year, and NIM was 3.65% for FY24 and 3.66% in Q4. FY24 slippages were INR 1,013 crores versus INR 1,276 crores in FY23, while recoveries were INR 1,031 crores. Management guided FY25 net NPA toward roughly 1% to 1.25%, slippages of about INR 700 crores to INR 800 crores, NIM broadly stable with only 5 to 10 bps movement, and cost-to-income ratio around 47% to 51% for the year.

The CEO framed FY24 as a year in which the bank hit two milestones: crossing INR 1 lakh crore of total business and INR 1,000 crores of PAT. He said the “repair” phase is largely complete and that FY25 should be a growth phase, supported by a strengthened management team, a new sales organization, and digital lending rollout across MSME and secured retail products. His tone was confident but measured: he repeatedly avoided overpromising on growth, saying he did not want to “cut a sorry figure” after missing prior guidance.

The CFO commentary centered on improved profitability, margin stability, and lower credit costs. He highlighted FY24 ROA of 1.52%, NIM of 3.65%, and net credit cost of 0.24% versus 0.90% in FY23, along with gross NPA at 3.99% and net NPA at 1.97%. On capital and liquidity, management said LCR is about 200% plus and that the board recommended a 150% dividend, including a 50% special dividend for the bank’s 120th year. He also said the bank is taking costs upfront for digital and sales investments, which should keep the cost-to-income ratio elevated near 47% to 51% in FY25 before moderating later.

Analysts focused on FY25 growth, margins, cost-to-income, ROA sustainability, ROE, and asset quality. Management said it expects net NPA to trend toward roughly 1% to 1.25%, slippages to fall to INR 700 crores to INR 800 crores, and growth to re-accelerate as digital lending and new sales verticals start contributing, but it stopped short of giving a firm loan-growth number. On retail strategy, the bank said it will start booking secured retail products such as home loans, LAP and micro-LAP from September, while unsecured retail will come later. Management also addressed concerns on treasury income, saying there is a headwind from interest-rate moves and regulatory changes, and on the lower ROE, saying the bank is holding excess capital for future growth.