Shares of Union Bank of India fell as much as 7.2% to Rs 161.75 on Friday, extending losses for a second straight session, after the state-run lender's first-quarter business update pointed to slower credit growth and a sequential decline in deposits.
The stock came under pressure after the bank said credit growth moderated during the quarter, with Retail, Agriculture and MSME (RAM) advances also expanding at a slower pace. It added that deposits declined on a quarter-on-quarter basis as competition for deposits across the banking sector intensified, while credit growth lagged deposit mobilisation.
The update suggests investors reacted to signs of softer business momentum despite continued year-on-year growth in the bank's loan and deposit book.
Credit Growth Slows; Deposits Decline Sequentially
In an exchange filing, the bank said, "Credit growth slows down, with RAM advances growth too remaining lower."
It also said, "Deposits sees a degrowth QoQ as deposit competition among banks intensify."
The lender further stated, "CD Ratio sees substantial decrease as growth in credit lags."
Gross advances rose 12.5% year-on-year to Rs 10,96,331 crore from Rs 9,74,489 crore a year earlier.
Total deposits increased 3.5% to Rs 12,83,365 crore from Rs 12,39,933 crore, while domestic deposits also grew 3.5% to Rs 12,82,770 crore from Rs 12,39,506 crore.
CASA deposits climbed 11.7% year-on-year to Rs 4,50,220 crore from Rs 4,03,003 crore.
Domestic advances increased 13.1% to Rs 10,61,128 crore from Rs 9,38,098 crore, while RAM advances rose 11.6% to Rs 6,08,095 crore from Rs 5,45,087 crore.
The bank said its domestic credit-deposit ratio stood at 82.72%, compared with 75.68% earlier.
Trading Activity Surges
Trading volume in Union Bank of India shares was nearly eight times the stock's 20-day average, according to Bloomberg data.
The stock has gained 8% over the past 12 months.
Among the 14 analysts tracked by Bloomberg, eight recommend "buy", four have a "hold" rating and two recommend "sell" on the stock.
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