City Union Bank Ltd Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Shweta Upadhyay - Asit C. Mehta Investment Interrmediates Ltd - Analyst : Hello. -- Good evening. So, just one question on this new tie up that you have done with this CSK. With this tie up is the bank now will be focusing more on the unsecured portion because the unsecured portion of our portfolio seems quite less like around 1% or 2%. So with this tie up are we starting to focus more on the unsecured portion? And if, yes, then up until what portion are you expecting to increase this unsecured portfolio out of the total loan book?

Question: Shweta Upadhyay - Asit C. Mehta Investment Interrmediates Ltd - Analyst : Okay. And so just one more question. Are we on track on the branch expansion that the bank has guided earlier?

Question: Shweta Upadhyay - Asit C. Mehta Investment Interrmediates Ltd - Analyst : And will this branch expansion be happening in Tamil Nadu and Southern regions itself or are we expanding the banks in other regions as well?

Question: Vatsal Shah - Knightstone Capital Management LLP - Analyst : So in retail, what are the products which we are looking to enter in and grow ourselves within?

Question: Vatsal Shah - Knightstone Capital Management LLP - Analyst : Okay. And we had also mentioned that for the northern part, we are going to appoint [DSS]. So have we appointed them? And if yes, then how has been the response?

Question: Vatsal Shah - Knightstone Capital Management LLP - Analyst : And on the restructuring portfolio. So you had said that you are going to take a additional provision call after you will complete two years. So I guess two years have been completed. So have you taken any decision on that?

Question: Vatsal Shah - Knightstone Capital Management LLP - Analyst : So you're not going to take any additional provision is it?

Question: Vatsal Shah - Knightstone Capital Management LLP - Analyst : Okay. Got it. And more or less could you give any number to what growth are we looking at over the next two-three years? Just a range. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 12:30PM, CTBK.NS - Q3 2025 City Union Bank Ltd Earnings Call

Question: Vatsal Shah - Knightstone Capital Management LLP - Analyst : And much of it will come through retail, right?

Question: Vatsal Shah - Knightstone Capital Management LLP - Analyst : No, the larger part of the growth. So far, we will go faster in retail, right? So that -- ?

Question: Siddharth Rajpurohit - YES Securities (India) Ltd - Analyst : Thank you for the opportunity. So 2% to 2.5% retail contribution is what is the actual level contribution that will happen in this year.

Question: Siddharth Rajpurohit - YES Securities (India) Ltd - Analyst : Yeah, the total advances -- of the total advances 2% to 2.5% of total contribution I think. --

Question: Siddharth Rajpurohit - YES Securities (India) Ltd - Analyst : For FY26? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 12:30PM, CTBK.NS - Q3 2025 City Union Bank Ltd Earnings Call

Question: Siddharth Rajpurohit - YES Securities (India) Ltd - Analyst : Okay. And going forward how this contribution will rise?

Question: Siddharth Rajpurohit - YES Securities (India) Ltd - Analyst : And during the quarter, we have seen that sequentially, retail traders or wholesale traders have come down, -- the advances have come down significantly in this segment. So are you seeing any stress in the low ticket MSME or the wholesale traders side?

Question: Siddharth Rajpurohit - YES Securities (India) Ltd - Analyst : But are you seeing any stress in the low ticket MSME -- ?

Question: Siddharth Rajpurohit - YES Securities (India) Ltd - Analyst : And on the deposit side, you have seen a sharp fall in the car segment. Also there is a fall in the car. Car I have seen a sharp fall, any specific reason?

Question: Siddharth Rajpurohit - YES Securities (India) Ltd - Analyst : Do you -- (technical difficulty) get any number in terms of growth and capital? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 12:30PM, CTBK.NS - Q3 2025 City Union Bank Ltd Earnings Call

Question: Siddharth Rajpurohit - YES Securities (India) Ltd - Analyst : Could you guide any number for the growth of total deposits?

Question: Siddharth Rajpurohit - YES Securities (India) Ltd - Analyst : Is broadly matching the credit growth.

Question: Sanjeev Damani - SKD Consulting. - Analyst : Good evening. The first question from my side is that do we do advances against gold also or not?

Question: Sanjeev Damani - SKD Consulting. - Analyst : So we have facilities in all branches to give advances against loan or only two branches are working like that.

Question: Sanjeev Damani - SKD Consulting. - Analyst : Barring metro. Secondly, do we also advance construction advance to the builder also, against mortgage of the development of property? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 12:30PM, CTBK.NS - Q3 2025 City Union Bank Ltd Earnings Call

Question: Sanjeev Damani - SKD Consulting. - Analyst : Okay. And you said that you want to focus more on MSME, that means it is a secured advance always because you must be taking pledge of their properties, plant and machinery, etcetera, giving this kind of advance or do you also advance against inventory and finished products?

Question: Sanjeev Damani - SKD Consulting. - Analyst : Okay. So it is fully secured?

Question: Sanjeev Damani - SKD Consulting. - Analyst : Last question is about the tie-up. When you use the word that you have made a tie up with CSK, I mean, CSK not into any financial, you have offered your card for CSK employees, I mean, can we say like this?

Question: Sanjeev Damani - SKD Consulting. - Analyst : Okay. So the CSK will do the marketing of the credit card and -- ?

Question: Sanjeev Damani - SKD Consulting. - Analyst : More clarification will come about this? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 12:30PM, CTBK.NS - Q3 2025 City Union Bank Ltd Earnings Call

Question: Sanjeev Damani - SKD Consulting. - Analyst : Okay. And similarly, you are planning to tie up like this with more organization where the card services will be provided by you. And there will be some sort of brand name along with the CUB's card.

Question: Sanjeev Damani - SKD Consulting. - Analyst : Okay. And the last question is about the fact that RBI has recently given some relaxation to increase the liquidity in the market. So how much benefit our bank is going to get out of it?

Question: Sanjeev Damani - SKD Consulting. - Analyst : Okay. So INR250 crore will be more available with the bank to give advances.

Question: Shweta Upadhyay - Asit C. Mehta Investment Interrmediates Ltd - Analyst : Just one question. If you can help me understand, how is the bank cost of deposit higher than the total cost of funds. Like the cost of deposits for the quarter and previously, if I see stand at 5.88%, whereas the cost of funds is lower, it's at 4.8%.

Question: Shweta Upadhyay - Asit C. Mehta Investment Interrmediates Ltd - Analyst : Yeah. So ideally your cost of funds should also include the borrowing which comes at a higher cost than the deposits, right?

Question: Shweta Upadhyay - Asit C. Mehta Investment Interrmediates Ltd - Analyst : What would be the bank's cost of borrowing.

Question: Gaurav Jani - Prabhudas Lilladher Pvt Ltd - Analyst : Just one question. We are right now these past two quarters we are, -- of about 60 basis points-65 basis points. Once you reach the target level of PCR, what sort of credit costs -- [research -- on a normalize basis.]

Question: Gaurav Jani - Prabhudas Lilladher Pvt Ltd - Analyst : What I was asking is after we reach a targeted level of PCR right. So what sort of normalized credit cost are we estimating? Right now we're at about 60 basis points-65 basis points.

Question: Gaurav Jani - Prabhudas Lilladher Pvt Ltd - Analyst : So what you're saying is that it would remain between 60 basis points-65 basis points.

Question: Rakesh Kumar - Batlivala & Karani Securities India Pvt Ltd. - Analyst : So just on margin for them. So, now we are going to have some changes in the [group experience and this cycle you.] (technical difficulty)

Question: Rakesh Kumar - Batlivala & Karani Securities India Pvt Ltd. - Analyst : Yeah. So I was asking about margin trajectory like because the bank is undergoing, change in the credit composition next year. And then we have interested cycle also. So how do we -- like you look ahead the margin trajectory and FY26 if we can, give me some rough guidance would be helpful. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 12:30PM, CTBK.NS - Q3 2025 City Union Bank Ltd Earnings Call

Question: Rakesh Kumar - Batlivala & Karani Securities India Pvt Ltd. - Analyst : 3.6. Okay. And credit cost guidance, You're saying it cost me mostly around this level.

Question: Rakesh Kumar - Batlivala & Karani Securities India Pvt Ltd. - Analyst : And targeted PCR number would be what number we are looking at targeted PCR number.

Question: Siddharth Rajpurohit - YES Securities (India) Ltd - Analyst : Can you guide on, I mean currently your recoveries and updates are almost equal to your slippages. So what time you will see the case?

Question: Siddharth Rajpurohit - YES Securities (India) Ltd - Analyst : Okay. So for the H2 till H1. --

Question: Siddharth Rajpurohit - YES Securities (India) Ltd - Analyst : And the rising cost of deposits, can you -- what does it the lower share of cost -- ? Does it actually -- rise in cost of deposit? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 12:30PM, CTBK.NS - Q3 2025 City Union Bank Ltd Earnings Call

Question: Siddharth Rajpurohit - YES Securities (India) Ltd - Analyst : And can you give the SLR number. Average SLR for the quarter?

Question: Siddharth Rajpurohit - YES Securities (India) Ltd - Analyst : Average?

Question: Pritesh Bumb - DAM Capital Advisors Limited - Analyst : Hi sir. Good evening, sir. Just a question fee side, our fees to assets has been slightly doing volatile. But what is your sense that it will go from here on given that the loan growth is still quite decent but our fee is not that much -- fee to asset is not that much better. So anything on that?

Question: Pritesh Bumb - DAM Capital Advisors Limited - Analyst : Yeah. So if I look at my number, what is I think we were somewhere around 1.0 to 1.1 last year, then we moved to from 1.1 to 1.2. So is there a trend that can still improve or use? As you said that maybe you're only at about 1.2, 1.25?

Question: Pritesh Bumb - DAM Capital Advisors Limited - Analyst : Sure sir. Second sir, on the extension to that margin question, basically, if any upward biases we can see in margins or any product we can do for margins to move up in terms of where margins can settle, especially, what happens in this February from the RBI side, anything on that?

Question: Pritesh Bumb - DAM Capital Advisors Limited - Analyst : Got it. If you not disclose this number, if you can mention how much is your EBLR and MCLR and other benchmark books if you have not disclosed this anymore because I joined a bit late.

Question: Pritesh Bumb - DAM Capital Advisors Limited - Analyst : EBLR is 45%, is it?

Question: Pritesh Bumb - DAM Capital Advisors Limited - Analyst : Okay. Moving on, it's moved from EBLR to fixed rate?

Question: Pritesh Bumb - DAM Capital Advisors Limited - Analyst : Okay. Yeah, that's it for me. Thank you so much, sir.

Question: Pritesh Bumb - DAM Capital Advisors Limited - Analyst : Sorry, I just forgot to you know, ask as you said, that blueboard will be still decent enough given that our margins will be a little bit under pressure when the rate outcomes happen, isn't including the bit to grow slower early on in the once the rate cuts start happening, you get a sense and then, maybe move up in terms of lending as a group perspective. Any thoughts on that?

Question: Pritesh Bumb - DAM Capital Advisors Limited - Analyst : Okay. So, of course, here as a whole because you are -- as you said that it will be a lagged basis, right? Our liabilities will be price over [time].

Question: Pritesh Bumb - DAM Capital Advisors Limited - Analyst : Okay. So we'll continue to grow, but then you're confident that the margins will come back with the lag by the end of the year basically.

Question: Pritesh Bumb - DAM Capital Advisors Limited - Analyst : Sure, sir. Thank you so much.

Question: Gaurav Jani - Prabhudas Lilladher Pvt Ltd - Analyst : Yeah, thank you again, sir. Just taking my question forward on asset quality actually. So we do have some tailwinds, right, in terms of recoveries because of the earlier or COVID stress right now. And assuming that, within a couple of quarters that normalizes. How is actually asset quality shaping up in your area of operations specifically Tamil Nadu and the segment you created, which is MSMEs, right? So any sort of all these signs of stress there and how sort of credits shaping up? Yeah, that is it. Would like to have a qualitative comment from management. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 12:30PM, CTBK.NS - Q3 2025 City Union Bank Ltd Earnings Call

Question: Gaurav Jani - Prabhudas Lilladher Pvt Ltd - Analyst : No, sure, I understood that. I didn't mean in terms of numbers. I just thought, how is -- the environment is sort of tough, right otherwise? We are seeing sort of all these signs of stress in some other segments in retail or probably not in MSME but in retail. So any signs of stress in MSME that you're looking at.

Question: Gaurav Jani - Prabhudas Lilladher Pvt Ltd - Analyst : Sure, understood, sir. That is it for my end. Thank you so much.

Question: Pritesh Bumb - DAM Capital Advisors Limited - Analyst : Sorry sir. On the slippages side you mentioned INR800 crore this year, right? We are at about INR555 crore already. So does that imply that -- I'm not implying anything? But how do we see it in the sense is that it's still INR250 crore.

Question: Pritesh Bumb - DAM Capital Advisors Limited - Analyst : Okay. But because already INR555 crore that means the price we paid for Q3 was about INR200 crore. And it's still -- if you don't even hit that number, if you are like around INR700 crore or even like a similar range of what H1 was basically.

Question: Pritesh Bumb - DAM Capital Advisors Limited - Analyst : Right. Sir, second question was in terms of recovery from return of pool. What kind of a pool we have right now? And what we have seen is that there has been likely lower recovery this time around in nine months. So any thought on that? You said about recovery from normal slippages and normal [GMK to my intact] as a guidance. But what about the pool? And how much can we, grow from there as well.

Question: Pritesh Bumb - DAM Capital Advisors Limited - Analyst : Last statement I missed.

Question: Pritesh Bumb - DAM Capital Advisors Limited - Analyst : So we should build the same number going forward as well and we can do easily.

Question: Pritesh Bumb - DAM Capital Advisors Limited - Analyst : Got it, sir. And, lastly, our cost to income has been relatively coming down. So this quarter also, I think we are down and we are at about INR46 crore I think INR47 crore, INR46 crore. What do you see from here on in terms of costing income? Do you see that it main job a bit and it may be stable here. How do you think about it?

Question: Pritesh Bumb - DAM Capital Advisors Limited - Analyst : You said you have incurred the retail expenses and you're waiting for --?

Question: Pritesh Bumb - DAM Capital Advisors Limited - Analyst : Okay. But what will it lead to that 48% to 50% type of cost to income because seems to be that there'll be some more investments in terms of OpEx. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 12:30PM, CTBK.NS - Q3 2025 City Union Bank Ltd Earnings Call

Question: Pritesh Bumb - DAM Capital Advisors Limited - Analyst : Perfect. Okay, thank you. That's it from my side. Thanks for answering all these questions. Thank you.