Banking
City Union Bank
A 120-year-old South Indian bank focused on secured MSME and gold lending.
For decades City Union Bank was the tortoise of Indian banking. The interesting question is what happens when the tortoise starts running. CUB built its reputation on small, secured loans to businesses in South India - steady growth, conservative underwriting and little drama. That history matters because faster loan growth is now meeting improving asset quality. For a bank, that combination is powerful but deserves scrutiny. Growth is easy to manufacture by loosening credit standards. The real test is whether a famously conservative lender can accelerate without compromising the culture that made it durable.
The one thing to remember: Fast loan growth is only good if asset quality survives it.
How the business works
CUB takes deposits and lends primarily to MSMEs, with meaningful gold-loan and secured-retail books. Small-ticket, collateral-backed lending limits concentration and loss severity. The bank earns net interest income from the spread between lending yields and deposit costs, plus fees. Profitability is driven by credit growth, NIM, operating costs and credit losses.
FY2025-26 snapshot
Net profit (PAT)
about ₹1,326 crore
Total income
about ₹7,909 crore
Deposits
about ₹78,308 crore
Advances
about ₹66,699 crore
Total business
about ₹1.45 lakh crore
Figures are for the financial year 2025-26 as reported by the company. Educational context only.
Where the money comes from
MSME loans Gold loans Secured retail lending Fees and other banking income
What could make it much bigger?
Formalisation expands the MSME credit pool. Gold and secured retail provide extra growth channels. Digital processes can improve productivity.
What can go wrong
Faster growth can create future NPAs.
Deposit competition can raise funding costs.
Regional/MSME concentration creates sensitivity to local conditions.
5 things to watch
Advance growth
Deposit/CASA growth
GNPA and NNPA
Net interest margin
Ramsam Takeaway
City Union Bank is attractive precisely because it has historically been boring. Faster growth can create a new earnings phase, but it should never be judged separately from asset quality and funding. The simple scorecard is: are advances growing, deposits keeping up and bad loans staying controlled?
This profile is educational context only. Ramsam does not rate companies or suggest whether to buy, hold or sell anything.