Union Bank Q2 profit rises 30%: Strong NII growth

Union Bank of India reported net profit of ₹5,537 crore in Q2 FY27, up 30.3% year-on-year, compared with ₹4,249 crore in the corresponding quarter last year. Net interest income (NII) increased 20.1% to ₹10,583 crore, while net interest margin improved to 2.86% from 2.67% a year earlier. Asset quality also improved, with gross NPA declining to 2.42% and net NPA falling to 0.42%. Why this matters Strong NII growth and lower bad-loan ratios indicate an improvement in the bank's core operating performance. Global advances grew 18.5% year-on-year, supporting the bank's lending momentum. However, advances grew faster than deposits, making funding costs and deposit mobilisation important areas to monitor. What to monitor next Net interest margin and funding costs. Deposit growth relative to advances. Gross and net NPA trends. Credit costs and provisions. Return on assets and capital adequacy. My analytical view: Union Bank's results are encouraging because earnings growth is supported by higher core interest income and improving asset quality. The next test is whether the bank can maintain this momentum while strengthening its deposit base. Risk to the thesis: Higher deposit costs, weaker margins or renewed stress in the loan book could moderate earnings growth. Disclosure: Disclose any applicable holding, position or interest accurately. SEBI RA Disclaimer: Umang Rajesh Bhutada is a SEBI-registered Research Analyst (INH000023001). This content is for educational and informational purposes only and is not investment advice. Securities investments are subject to market risks. Please consult a qualified financial professional before making investment decisions.