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City Union Bank Shares Fall 5% Even As Profit Jumps 25%
City Union Bank shares fell nearly 5% in early trade on Wednesday despite the lender reporting a strong June-quarter performance, with higher profit, robust growth in net interest income and an improvement in asset quality.
Around 10:50 am, the stock was trading at Rs 227.9 on the NSE, down from its previous close of Rs 238.14, while the Nifty 50 was up about 1%.
Investors appeared to look beyond the headline earnings, focusing instead on the bank’s overall performance, including growth in core income, asset quality and other key operating metrics.
Also Read: City Union Bank Q1 Results: Profit Jumps 25% As NII Surges, Asset Quality Improves
Profit, NII Register Strong Growth
City Union Bank reported a net profit of Rs 383 crore for the first quarter, up 25.1% from Rs 306 crore in the corresponding period last year.
Net interest income rose 31% year-on-year to Rs 820 crore from Rs 625 crore, reflecting healthy growth in the bank’s core lending business.
Operating profit increased 28.8% to Rs 581 crore during the quarter, compared with Rs 451 crore a year earlier.
Provisions came in at Rs 78 crore compared with Rs 70 crore in the year-ago period. However, on a sequential basis, the lender reduced provisions from Rs 120 crore in the March quarter.
The lender’s asset quality strengthened during the quarter. Gross non-performing assets stood at 1.73%, improving from 1.91% in the previous quarter, while net NPA declined to 0.61% from 0.68% sequentially.
Despite the improvement in earnings and asset quality, City Union Bank shares declined as much as 5% during the trading session following the results announcement.
Shares Rallied 49% Over A Year.
Even though the stock is down today, it has been rallying for a prolonged period. The stock gained over 48.8% during the past year, while in the past month, the stock was up 13.2%.
Even during the past week, the stock gained 2%, despite today’s decline.
The stock is currently trading at a price-to-earnings multiple of 16.8 times, and its market cap stood at Rs 22,553.3 crore as at the end of the previous trading session.
Also Read: Q1 Results Updates: L&T Profit Rises 14%; Suzlon Energy Revenue Up 22%
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