• ECL framework impact: City Union Bank plans to absorb any ECL-related shortfall directly into its capital base, as its capital adequacy ratio is well above 20%, avoiding ongoing pressure on the P&L.
• Credit growth guidance: The bank maintains a baseline guidance of growing 2% to 3% above the industry average, following strong 26.5% year-on-year credit growth driven largely by gold loans.
• Gold loan exposure: Gold loans have surpassed the internal target of 30% to 32% of total advances and will grow proportionately with overall credit, with conservative per-gram lending rates providing a safety buffer against gold price drops.
• FY27 performance outlook: Return on assets (1.56% in Q4) and net interest margins (3.87% in Q4) are expected to remain near current levels within a narrow band, supported by decade-low NPA and SMA levels.
• MSME credit trends: Borrowers in the MSME segment are actively seeking financing for machinery and capacity expansion, supported by improving capacity utilization and initial investments in solar power.