City Union Bank shares in focus as SBI Mutual Fund ups stake in lender

Shares of City Union Bank, which climbed over 25 per cent in the past one month,  will be in focus on Thursday morning after the private bank said SBI Mutual Fund, under its various schemes, acquired 8,99,147 additional shares in the lender, representing 0.12 per cent of the paid up capital of the bank as on July 2.

The latest holding of SBI Mutual Fund in the bank stood at 6,05,86,050 shares, which was 8.18 per cent the paid-up capital of the lender. SBI Mutual Fund held 5,96,86,903 shares or 8.05 per cent stake in City Union Bank earlier.

The recent up-move in the stock has been fuelled by receding asset quality woes, bottoming of credit growth -- with regulatory interventions largely behind, and recent elevation of Executive President R Vijay Anandh (from RBL Bank) to Whole-time Director, thus paving the path for his succession (from current MD & CEO Kamakodi, who will step down in 2026), Emkay Global said on June 20.

The management believes FY22-24 was a period of consolidation, marked by balance sheet and asset quality repair, with focus now shifting toward profitable growth led by higher share of retail.

"We believe building the retail book comes with its own challenges and, hence, any sustained re-rating will be conditioned to demonstrating successful retailization as well as the long-awaited growth acceleration. Separately, we believe the bank needs to shore-up its otherwise lower specific PCR of 51 per cent to 70 per cent, even if it means sacrificing profitability in the near term," Emkay Global said on June 20.