Union Bank of India Shares Tumble 5% Post Q4FY25 Business Update – Here’s What Investors Should Know
Union Bank of India witnessed a sharp decline in its share price on Friday, April 4, 2025, falling nearly 5% intraday to ₹124.77, after releasing its Q4FY25 business update. While the bank reported year-on-year growth in its total business, deposits, and advances, the market’s reaction hints at concerns around earnings growth and shrinking net interest margins (NIMs).
Let’s break down the update and understand what’s really going on beneath the surface.
🔍 Q4FY25 Business Snapshot: Solid Growth but Market Cautious
In its official exchange filing, Union Bank of India reported an impressive 7.85% growth in its total business, reaching ₹22.93 lakh crore for the quarter ending March 31, 2025. Here’s a closer look at the key highlights:
- Gross Advances: ₹9.83 lakh crore in Q4FY25 vs ₹9.05 lakh crore in Q4FY24 – YoY growth of 8.62%
- Total Deposits: ₹13.10 lakh crore in Q4FY25 vs ₹12.21 lakh crore in Q4FY24 – YoY growth of 7.22%
- Domestic CASA (Current and Savings Account): ₹4.26 lakh crore vs ₹4.10 lakh crore – YoY growth of 3.94%
- Retail Advances: ₹2.17 lakh crore vs ₹1.77 lakh crore – YoY growth of 22.14%
While these numbers suggest healthy expansion in core banking activities, the sharp fall in stock price suggests investors may be pricing in softer earnings growth going forward.
📊 Key Financial Ratios of Union Bank of India (as of Q3 FY25)
| Particulars | Value |
|---|---|
| Net Profit (Q3 FY25) | ₹4,623 crore |
| Net Profit Growth YoY | 27.53% |
| Total Income (Q3 FY25) | ₹27,135 crore |
| Total Income Growth YoY | 6.32% |
| Gross Advances (Q4 FY25) | ₹9,82,875 crore |
| Total Deposits (Q4 FY25) | ₹13,09,750 crore |
| CASA Ratio | ~32.55% |
| Domestic Retail Advances YoY | 22.14% |
| Net Interest Margin (NIMs) | Under pressure (as per forecast) |
| Credit Costs | Expected to stay under control |
🧠 Market Reaction: Why Did the Stock Fall Despite Business Growth?
There are a few key reasons why Union Bank’s stock might have seen a dip:
- Earnings Growth Concerns: According to Motilal Oswal, PSU banks are expected to report only modest earnings growth of 4.5% YoY in Q4, with Net Interest Income (NII) projected to grow by a modest 2.8%. Sluggish NIMs are one of the main culprits.
- NIM Pressure: Lower net interest margins mean banks earn less from their core lending activity. In a rising interest rate environment or with competitive deposit rates, NIM compression affects profitability.
- Asset Quality Outlook: Although no major slippages are expected, past increases in the SMA (Special Mention Accounts) pool raise some caution, even though recoveries are likely.
- Profit Booking: Given the strong run-up in PSU bank stocks recently, investors might be using the update as an opportunity to book profits.
💡 Analyst Outlook: What’s Ahead for PSU Banks?
Brokerages are cautiously optimistic. Motilal Oswal forecasts a 9% CAGR in aggregate earnings for PSU banks over FY25–27. They expect:
- Treasury gains due to falling bond yields
- Improved income from non-interest sources
- Credit costs to remain contained, thanks to regulatory changes
However, normalizing NIMs and earnings volatility in equity markets may keep investors on edge in the near term.
📈 Union Bank’s Recent Performance at a Glance
Despite Friday’s fall, Union Bank had delivered strong Q3FY25 results, with net profit soaring 27.5% YoY to ₹4,623 crore. The bank’s total income was also up 6.32% YoY, showcasing a solid performance across its income streams.
This could mean that while the Q4 business update reflects growth, the expectation mismatch between reported business and anticipated earnings growth is what’s rattling the market.
🤔 Q&A: Quick Takeaways from the Article
Q1. Why did Union Bank of India shares fall after the Q4FY25 update?
A: Despite showing growth in business metrics like advances and deposits, investors are concerned about lower net interest margins and modest earnings growth, leading to a 5% drop in share price.
Q2. What are the highlights of Union Bank’s Q4FY25 performance?
A: Total business grew 7.85% YoY, gross advances rose 8.62%, and retail advances jumped 22.14%. Deposits were also up by 7.22%.
Q3. How did Union Bank perform in Q3FY25?
A: Net profit surged 27.5% YoY to ₹4,623 crore, and total income grew 6.32%.
Q4. What is the outlook for PSU banks like Union Bank?
A: Analysts expect modest earnings growth, stable asset quality, and improved treasury gains, though NIM pressure could be a headwind.
Q5. Should investors be worried?
A: Not necessarily. The fundamentals are strong, but short-term volatility may persist due to macroeconomic factors and investor sentiment.
If you’re tracking Union Bank of India or the broader PSU banking space, keep an eye on NIM trends, treasury gains, and earnings updates in upcoming quarters. Short-term dips can also present long-term opportunities—provided the fundamentals stay strong.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.