New Delhi: Union Bank of India has received a AAA (Stable) credit rating from ICRA Ratings Limited for its proposed infrastructure bonds worth ₹10,000 crore. The rating was disclosed in a regulatory filing under SEBI LODR regulations.
Alongside this, ICRA reaffirmed the bank’s AAA (Stable) rating on its Basel III Tier-2 bonds (₹5,200 crore) and A1+ rating on certificates of deposit (₹35,000 crore), taking the total rated instruments to ₹50,200 crore.
Strong Market Position Supports Ratings
ICRA highlighted Union Bank of India’s strong position in the Indian banking sector. It is currently the fifth-largest public sector bank, with a 5.0% market share in net advances and 5.1% in deposits as of December 31, 2025.
The rating also reflects:
- A healthy earnings profile with stable operating profitability
- Moderating credit costs and robust recoveries from stressed assets
- High provision coverage on legacy NPAs
ICRA noted that these factors contribute to the bank’s stable credit profile and overall systemic importance.
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Government Support and Capital Strength
The ratings are further reinforced by sovereign ownership, with the Government of India holding a 74.76% stake as of December 2025.
Union Bank’s capital position remains comfortable, supported by internal accruals and a previous ₹8,000 crore QIP in FY2024. Key capital ratios include:
- CET-1 Ratio: 13.94%
- Tier-1 Ratio: 15.06%
These figures underline the bank’s ability to absorb potential shocks and continue growing responsibly.
Improving Asset Quality
The bank has shown a significant improvement in asset quality:
- Gross NPA: 3.06%
- Net NPA: 0.51%
Strong recoveries, upgrades, and write-offs have driven these improvements, positioning the bank for steady financial performance in the near-to-medium term.
Liquidity and Earnings Profile
Union Bank of India’s liquidity profile remains robust, aided by a large core deposit base and positive short-term mismatches. The Liquidity Coverage Ratio (LCR) stood at 124% in Q3 FY2026.
Despite some moderation in Net Interest Margins (NIMs), the bank maintained healthy trading gains and strong profitability, with an annualized RoA of 1.20% and RoNW of 15.64% in 9M FY2026.
Outlook and Monitorables
ICRA maintains a Stable outlook, expecting the bank to preserve steady credit metrics. Key areas of monitoring include:
- Limiting slippages from vulnerable loan segments, particularly MSMEs
- Managing potential macroeconomic impacts on borrowers
- Sustaining asset quality improvements while maintaining strong capitalization and liquidity
About Union Bank of India
Founded in 1919, Union Bank of India is one of India’s leading public sector banks, offering a wide range of financial services, including retail banking, corporate banking, and treasury operations. With a network of over 8,600 branches and a strong deposit franchise, the bank is recognized for its financial stability, innovative banking solutions, and commitment to serving both urban and rural customers across India.
