Union Bank of India Q4 FY26: Shares slide 10% on weak NII

Why the stock sold off after earnings

Shares of Union Bank of India fell again on Friday, extending the sell-off that followed the lender’s Q4 FY26 earnings announcement. The stock dropped about 2% in Friday’s trade to around ₹175.52 on NSE, taking the two-day decline to roughly 10% after results were released during market hours on Thursday. Market commentary pointed to weaker core income, a sharp rise in provisions, and margin pressure as key reasons behind the negative reaction.

Even though the bank reported higher profit, the quarter did not ease concerns on the sustainability of earnings growth. Brokerages flagged that elevated credit costs and higher slippages could keep sentiment cautious in the near term. The reaction also came at a time when PSU bank stocks have been sensitive to treasury and bond-yield risks, adding to volatility.

Q4 FY26 headline numbers: profit up, core income down

Union Bank reported a 6.6% year-on-year rise in standalone net profit to ₹5,316 crore for the January to March quarter of FY26, compared with ₹4,985 crore a year earlier. Sequentially, some reports said profit rose about 6% from ₹5,017 crore in Q3 FY26.

However, net interest income (NII), which is the bank’s core income line, declined 1.14% year-on-year to ₹9,406 crore, down from ₹9,514 crore in the corresponding quarter last year. A separate market report also noted that NII growth was largely flat on a sequential basis, rising about 1% quarter-on-quarter to ₹9,406 crore.

Total income was reported at ₹31,851 crore, down about 3% year-on-year, as per the wire copy referenced in the article text.

Provisions: multiple data points, same investor worry

A key overhang for the stock was the sharp rise in provisioning. One report highlighted that provisions nearly tripled sequentially from ₹322 crore to ₹1,055 crore. Another wire report cited provisions rising nearly 80% sequentially to ₹423 crore.

While the article text does not reconcile these figures, both data points reinforced the same market concern: higher provisioning reduces reported profitability and can signal higher risk costs. Investors typically focus on this line because it affects near-term earnings and can alter the trajectory of return ratios.

Slippages and credit costs: sequential stress flagged

Fresh slippages for the quarter were reported at ₹2,023 crore, lower than ₹2,483 crore a year ago. But sequentially, slippages were said to have jumped almost 22%, which led some analysts to caution that stress could show up in coming quarters.

Another metric closely tracked was credit cost. The wire report cited a sequential increase in credit cost to 0.16% from 0.09% in the previous quarter. Even though one analyst attributed the rise to seasonal stress, the increase contributed to the risk-off reaction in the stock immediately after results.

Asset quality improved, but investors focused on forward risk

The article text notes that overall asset quality continued to improve, supported by lower NPAs, even though slippages were marginally higher in Q4. This combination can happen when the stock of bad loans declines due to recoveries and upgrades, while new stress still emerges in parts of the book.

Motilal Oswal said it was fine-tuning estimates and projected FY27E RoA and RoE at 1.1% and 13.9%, respectively. The brokerage also said it expects loans to expand at a 10.5% CAGR over FY26 to FY28. Despite these medium-term metrics, it maintained a cautious stance on the stock.

Other income helped, including a large recovery

Other income was reported up over 19% to ₹5,412 crore. The wire report noted that a major part of this came from recovery from written-off loans.

It specifically mentioned a recovery of ₹658 crore from the Sterling Biotech account in the March quarter. Such recoveries can support quarterly performance, but investors usually assign a lower quality to earnings driven by one-offs compared with sustained improvement in core spreads and loan growth.

Brokerages: Neutral call, limited upside cited

Motilal Oswal maintained a ‘Neutral’ rating on Union Bank of India with a target price of ₹180 per share. The target implied only marginal upside versus the previous NSE close of ₹179.71 mentioned in the article text.

The note also reflected continued caution on near-term upside due to pressure points such as NII weakness and higher credit costs. Analyst commentary in the wire copy added that rising provisions and sequential slippage trends had added to investor concerns about future earnings growth.

Dividend announcement and record date

The board recommended a dividend of ₹5 per equity share (face value ₹10) for FY26, subject to shareholders’ approval. The record date to determine shareholder eligibility had not been announced at the time of the reports cited in the article text.

For investors, the pending record date is a key administrative detail, but the market reaction in this case was driven more by earnings quality and risk-cost indicators than by dividend expectations.

Stock performance snapshot across time frames

Union Bank’s stock traded around ₹175.52 on Friday, after falling close to 9% to an intraday low of ₹177.30 on Thursday following the earnings release, according to the wire report excerpt. The broader trend in the article text also highlighted how quickly sentiment shifted post-results.

Over longer periods, the stock was still up about 15% in 2026 so far, up around 37% over one year, and up more than 139% over three years, even after the sharp two-day fall.

Key numbers at a glance

What investors will track next

Going forward, investors are likely to monitor whether NII stabilises as margin pressures play out, and whether the sequential rise in slippages and credit cost moderates. The bank’s trend in provisioning will also remain important because even a few quarters of elevated credit costs can change the earnings trajectory.

The next set of updates on asset-quality indicators, loan growth, and any communication around the dividend record date are likely to be key reference points as markets reassess the stock after the post-results sell-off.