Union Bank of India reported an 18.53% rise in gross advances to ₹11.56 lakh crore for the quarter ended September 30, 2026. While credit growth remains strong, the slower pace of deposit mobilization, reflected in a rising credit-to-deposit ratio, is a key metric investors are tracking for potential pressure on profit margins.
Union Bank of India has reported a significant 18.53% year-on-year increase in its gross advances, which touched ₹11.56 lakh crore by the end of the second quarter of the current fiscal year. The provisional business update, released for the period ending September 30, 2026, highlights the bank's continued efforts to expand its lending portfolio, with domestic advances alone growing by 17.36% to reach ₹11.05 lakh crore.
While the expansion in credit is substantial, investors are paying close attention to the pace of deposit collection. The bank's total global deposits grew by 6.87% year-on-year to reach ₹13.19 lakh crore. The gap between the faster-growing credit portfolio (18.53%) and the slower-growing deposit base (6.87%) has resulted in the domestic credit-to-deposit ratio climbing to 84.34%, compared to the previous quarter. For banks, a rising credit-to-deposit ratio often signals that they may need to rely on more expensive sources of funding to meet loan demand, which can sometimes create pressure on net interest margins.
The bank continues to prioritize the retail, agriculture, and micro, small, and medium enterprise segments, collectively known as RAM. Advances in this category grew by 14.65% year-on-year to ₹6.35 lakh crore, reflecting the lender's focus on diversifying its loan book toward these priority sectors. Meanwhile, domestic current account and savings account deposits grew by 14.66%, contributing to a domestic CASA ratio of 34.93%. These CASA deposits are generally considered a lower-cost funding source for banks.
Market reaction to the update was cautious on October 1, 2026, with the bank's share price closing 1.99% lower at ₹167.59. Investors appear to be weighing the strong growth in loan volumes against the potential for higher funding costs and the need to maintain stable margins in a competitive banking environment.
Looking ahead, the primary monitorable for shareholders will be the bank's ability to balance its rapid credit expansion with the need for low-cost deposit growth. As these figures are provisional and subject to audit verification, the final quarterly financial results will provide more clarity on how this credit growth has translated into actual profitability and whether the bank can effectively manage its cost of funds to protect its interest margins.