Union Bank of India shares fall 10% in two days after Q4 earnings. What’s spooking investors?

The public lender on Thursday reported a 6.6% year-on-year (YoY) rise in net profit to Rs 5,316 crore for the January-March quarter of FY26. Its net interest income (NII), however, slipped over 1% YoY to Rs 9,406 crore during the quarter under review.

Provisions saw a sharp spike during the quarter, increasing to Rs 1,055 crore from Rs 322 crore in the December quarter, marking a nearly three-fold rise, according to the company’s regulatory filing. Asset quality, however, improved, with the gross NPA ratio declining to 2.82% and the net NPA ratio easing to 0.48% during the quarter under review.

Along with the Q4 results, Union Bank of India recommended a dividend of Rs 5 per equity share for the financial year 2026, subject to necessary approvals. The record date to determine the eligibility of shareholders set to receive the dividend is yet to be announced.

Why Motilal Oswal remains ‘Neutral’ on Union Bank shares?

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Motilal Oswal maintained its ‘Neutral’ rating on the shares of Union Bank of India, with a target price of Rs 180 apiece, implying a marginal upside potential over the stock’s previous closing price of Rs 179.71 apiece on NSE. The domestic brokerage said that the company’s net profit beat its estimate by 18%, led by NPA recoveries and lower opex. This was partly offset by lower NII and higher-than-expected provisions.
NIM contraction was majorly attributed to the transmission of the repo rate cut, Motilal noted, adding that the management expects growth to sustain at 13-14% while the CD ratio shall remain comfortable at approximately 82-83%.
Union Bank of India reported a modest quarter, with NIM contraction weighing on performance, although stronger other income supported an earnings beat, even as credit costs were elevated due to the creation of standard asset provisions, the domestic brokerage said. “Loan growth improved following a subdued 1H, while deposit growth also rebounded in a seasonally strong quarter, with the bank remaining cautious on bulk deposits. Management has guided for loan growth of 12-14%, with a continued focus on margin-accretive expansion. Margins came in below expectations, largely impacted by repo rate transmission following the Dec’25 rate cut. The bank has built a standard asset provision buffer of ~INR30b (including ~INR7b created in 4Q), while the estimated ECL transition impact stands at ~INR42-43b. Asset quality continued to improve overall, although slippages were marginally higher in 4Q,” it further said, adding, “We fine-tune our estimates and project FY27E RoA/RoE at 1.1%/13.9%. We expect loans to expand at a 10.5% CAGR over FY26-28.”

Union Bank of India share price

Union Bank of India dropped over 2% to trade at Rs 175.52 apiece on Friday. The stock has fallen around 10% in two days after announcing its Q4 earnings during market hours on Thursday. The stock has declined around 7% in one month, but is up 15% in 2026 so far.

In the longer term, the shares of the bank gained around 37% in one year and more than 139% in three years.

Also read: Why is the stock market falling today?

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