Union Bank Q4 FY26 Results: Profit up 6.6%, NIM dips

Key takeaway from the Q4 print

Union Bank of India reported a year-on-year rise in profit for Q4 FY26, supported by lower provisions and operating expenses. But the market reaction was negative after sequentially higher provisions and softer core margin metrics. The state-owned lender posted net profit of ₹5,316 crore in the March 2026 quarter, up 6.6% from ₹4,985 crore a year earlier. On a quarter-on-quarter basis, profit rose 6% from ₹5,017 crore in Q3 FY26. The results were published on Apr 23, 2026 (7:09 PM IST).

Net profit rises despite mixed operating trends

The bank attributed the year-on-year profit increase to lower provisions and operating expenses. Operating profit before provisions and contingencies rose 3.3% year-on-year to ₹7,955 crore, indicating better pre-provision profitability. Sequentially, operating profit before provisions and contingencies increased 14.6%, giving the quarter a stronger run-rate on this line item. Still, the quarter also saw pressure on net interest income, a key driver for banks. The mix of improving cost and provisioning on one side and weaker NII on the other defined the quarter’s narrative.

Provisions: down YoY, sharply up sequentially

Provisions declined 2.76% year-on-year to ₹2,640 crore in Q4 FY26 from ₹2,715 crore in Q4 FY25. The sequential picture was materially different, with provisions rising 37.1% from ₹1,925 crore in Q3 FY26. The bank said the sequential jump was mainly due to a one-time increase in standard asset provision of ₹700 crore. This provisioning move became a key point for investors tracking quarterly volatility in credit costs.

NII slips YoY as NIM moderates

Net interest income (NII) stood at ₹9,406 crore in Q4 FY26, marginally lower by 1.1% year-on-year. Sequentially, NII was up 0.8%, suggesting some stabilisation compared with the previous quarter. Net interest margin (NIM) moderated to 2.64% in Q4 FY26 from 2.76% in Q3 FY26. NIM was 2.87% in Q4 FY25, highlighting the year-on-year compression in margin. The bank’s MD and CEO Asheesh Pandey said margins were “relatively stable,” with NIM moderating from 2.91% (FY25) to 2.70% (FY26), a decline of 21 basis points.

Interest income and interest expenses both fall

Interest earned declined 4.5% year-on-year to ₹26,439 crore. Interest expenses fell 6.3% to ₹17,033 crore, helping cushion the impact of lower interest income on spreads. The data shows a quarter where the cost of funds eased, but not enough to fully offset the pressure on earning assets and margins. With NII down slightly year-on-year and NIM lower both sequentially and year-on-year, the market focus stayed on core profitability rather than headline profit growth.

Other income: sequential rebound, but treasury income weak

Other income declined 2.6% year-on-year to ₹5,412 crore in Q4, but rose 19.2% sequentially. Treasury income fell sharply to ₹636 crore in Q4 FY26, down 61.4% year-on-year and 29.4% sequentially. Pandey noted that other income in the previous year included a one-off recovery of ₹787 crore from the sale of two NARCL-backed accounts with sovereign guarantee support. He added that adjusting for that, other income declined by about 1.9% year-on-year. These disclosures helped frame the year-on-year comparison for non-interest revenue.

Operating expenses decline, supporting profitability

Operating expenses declined 6.9% year-on-year and 0.9% sequentially to ₹6,863 crore in Q4 FY26. The reduction in costs contributed to the improvement in net profit even as margins softened. Cost control also supported the operating profit before provisions line, which improved both year-on-year and sequentially. For investors, the operating expense trend offered an offset to the weaker NII profile.

Loan growth remains steady; deposits flat YoY

On the business front, total advances grew 9.7% year-on-year to ₹10.79 trillion (₹10,79,000 crore). Advances also rose 6.1% sequentially, pointing to steady credit demand through the quarter. Deposits were largely flat on a yearly basis at ₹13.07 trillion (₹13,07,000 crore), but increased 6.9% quarter-on-quarter. The divergence between advances growth and flat year-on-year deposits is closely watched in the sector, as it can affect funding costs and margins.

Stock reaction: sharp fall after results

Union Bank shares saw a steep decline after the results, reflecting investor concerns around margin moderation and sequentially higher provisions. Shares of Union Bank of India fell 7.40% on Tuesday to settle at ₹179.65 on the BSE. The broader narrative in market commentary also cited weak NII and higher slippages as factors weighing on the stock. The price move showed that the market prioritised forward-looking asset quality and margin signals over the reported profit rise.

Snapshot of reported numbers

Market impact

The quarter illustrated how bank earnings can diverge between headline profit and underlying drivers. While net profit rose year-on-year and quarter-on-quarter, NII was lower year-on-year and NIM moderated to 2.64%, both of which are central indicators for banking performance. The sharp sequential rise in provisions to ₹2,640 crore, driven largely by the ₹700 crore one-time standard asset provision, also influenced sentiment. The stock’s fall to ₹179.65 on the BSE, down 7.40% on the day, underscored that investors weighed margin and provisioning trends heavily.

Analysis: what the numbers signal

Union Bank’s Q4 FY26 results show improved cost control, with operating expenses down to ₹6,863 crore, helping protect profitability. But the core banking engine faced pressure, visible in the 1.1% year-on-year decline in NII and the sequential fall in NIM from 2.76% to 2.64%. The non-interest income mix also shifted, with treasury income dropping to ₹636 crore and the year-on-year comparison affected by a prior-year one-off recovery of ₹787 crore. The growth picture was stronger on advances at ₹10.79 trillion (₹10,79,000 crore), while deposits were flat year-on-year at ₹13.07 trillion (₹13,07,000 crore), a combination that can matter for funding dynamics and margin stability.

What investors may track next

Going forward, investors are likely to monitor whether NIM stabilises after moderating in Q4 FY26, and how provisioning trends evolve after the one-time standard asset provision. The pace of deposit mobilisation versus credit growth will also remain important, given the flat year-on-year deposit base alongside near-10% advances growth. Management commentary already emphasised that FY-level margins moved 21 basis points lower, which sets a reference point for future quarters.

Conclusion

Union Bank of India reported Q4 FY26 net profit of ₹5,316 crore, up 6.6% year-on-year, supported by lower operating expenses and lower provisions compared with last year. But the quarter also featured softer NII, a lower NIM of 2.64%, and a sharp sequential rise in provisions tied to a ₹700 crore one-time standard asset provision. The immediate market response was negative, with the stock settling 7.40% lower at ₹179.65 on the BSE. Future updates on margin trajectory, provisioning, and deposit growth will be key data points after this quarter’s mixed signals.