- City Union Bank shares dropped 22.8% after 1:3 bonus issue became effective on June 12
- Shareholders receive one additional share for every three held, increasing holdings by 33.33%
- Bank declared Rs 2 per share dividend for FY26, pending shareholder approval
City Union Bank shares fell 22.8% to Rs 198.25 on June 12 after the lender's 1:3 bonus issue became effective. The sharp drop may look like a sell-off at first glance. The move, however, reflects a bonus share adjustment rather than a change in the bank's underlying business performance.
The private lender had fixed June 12, 2026, as both the record date and ex-date for its bonus issue. Eligible shareholders will receive one additional fully paid-up equity share for every three shares held as of the record date.
Bonus Impact
Investors needed to own City Union Bank shares by the close of trading on June 11 to qualify for the bonus allotment because the ex-date and record date fell on the same day.
Following the issue, shareholders' total holdings will increase by 33.33%. At the same time, the stock price adjusts to account for the larger number of shares in circulation.
As a result, the overall value of an investor's holding remains broadly unchanged immediately after the bonus issue despite the lower share price.
ALSO READ: City Union Bank Declares 1:3 Bonus Issue, Rs 2/Share Dividend. Check Details
Dividend Benefit
Alongside the bonus issue, the bank has proposed a dividend of Rs 2 per equity share for FY26. The dividend remains subject to shareholder approval at the lender's upcoming annual general meeting.
Growth Track
City Union Bank reported net profit of Rs 360 crore for the January-March quarter, up 24.9% from Rs 288 crore a year earlier.
Net interest income rose 30.9% to Rs 786 crore from Rs 600 crore in the corresponding period last year. Asset quality improved during the quarter. Gross non-performing assets stood at 1.9% compared with 2.2% in the previous quarter, while gross NPAs declined to Rs 1,273.08 crore from Rs 1,320 crore.
Net NPAs improved to 0.68% from 0.78%. The net NPA amount fell to Rs 449.42 crore from Rs 469.34 crore. For FY26, net interest income increased 22% to Rs 2,830 crore from Rs 2,316 crore in FY25.
Non-interest income rose 16% to Rs 1,039 crore from Rs 898 crore. During the March quarter, non-interest income increased to Rs 290 crore from Rs 251 crore, supported by loan processing charges and insurance commission income. Operating profit grew 20% to Rs 2,014 crore in FY26 from Rs 1,679 crore in the previous year. Gross profit for the March quarter rose 31% to Rs 580 crore from Rs 441 crore.
Net profit for FY26 increased 18% to Rs 1,326 crore from Rs 1,124 crore. March-quarter profit rose 25% to Rs 360 crore, the highest quarterly profit reported by the bank.
Total deposits climbed 23% year-on-year to Rs 78,308 crore, while advances increased 26% to Rs 66,699 crore. The CASA ratio stood at 28%, and the average credit-deposit ratio was 85%. The gross NPA ratio improved to 1.91% in FY26 from 3.09% a year earlier, while the net NPA ratio declined to 0.68% from 1.25%.
The bank said both gross and net NPAs have improved sequentially for eight consecutive quarters. Net interest margin stood at 3.74% for FY26. Return on assets was 1.56%, while return on equity improved to 13.35% from 12.63% in FY25.
ALSO READ: City Union Bank Sets Record Date For 1:3 Bonus Issue; Check Details
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