Prabhudas Lilladher Recommends 'BUY' on City Union Bank, Sets Target Price at Rs 310

• City Union Bank (CUB) reported a strong quarter, beating core PAT by 15.2% due to improved Net Interest Income (NII)/Net Interest Margin (NIM) and fees.
• Credit growth was robust at 21.5% year-on-year and 5.9% quarter-on-quarter, with reported NIM increasing by 29 basis points quarter-on-quarter to 3.9%.
• The increase in NIM was driven by better loan yields, particularly from high-yielding gold loans, and a 16 basis point fall in deposit costs due to repricing.
• CUB expects NIM to remain stable, with the negative impact of future repo rate cuts offset by further deposit repricing and 30% fixed-rate loan exposure.
• Asset quality remains strong, with recoveries consistently surpassing slippages for the past 10 quarters; Prabhudas Lilladher upgrades core PAT and raises target price to Rs 310.