Union Bank Shares Fall 6% as Q1 Update Reveals Sequential Slowdown

Union Bank shares fall sharply by 6 percent on Tuesday after the bank released its Q1 FY25 business update, showing signs of a sequential slowdown in key financial metrics. 

Investors reacted quickly, pushing the stock down to around ₹144 during intraday trade on the NSE.

What caused Union Bank Shares fall?

The bank’s loan growth, deposit momentum, and other core financial indicators showed only modest improvement when compared to the previous quarter. 

While the year-on-year numbers appear strong, the quarter-on-quarter performance signaled a cooling pace, which made the market cautious.

So, what exactly changed?

In Q1FY25, Union Bank reported:

• Gross advances rose by 11.3 percent year-on-year, reaching ₹9.89 lakh crore.
• But on a sequential basis, loan growth was up only 2.3 percent from ₹9.67 lakh crore in Q4FY24.
• At ₹12.48 lakh crore, deposits increased 9.6% year over year, but only 2.5% sequentially.

These figures suggest that while growth is continuing, the momentum is slowing, especially compared to the faster pace seen in earlier quarters.

How did the market respond?

The slowdown immediately impacted market sentiment. Union Bank shares fall (UNIONBANK.NS) and dropped over 6 percent intraday, before recovering slightly. 

Investors appear concerned that the growth trajectory may be flattening, especially in a competitive and high-rate environment.

Brokerages and analysts also raised concerns about:

• Credit demand is tapering off.
• A more restricted liquidity situation.
• Rising competition from private banks offering higher deposit rates.

This led to increased profit booking by traders who had gained from the stock’s recent upward run.

Did Union Bank say anything about the update?

The bank did not issue a detailed statement beyond its business update, but the numbers speak for themselves. The sequential slowdown in both credit and deposits is a red flag for those tracking the bank’s quarterly performance closely.

Union Bank is also scheduled to announce its full Q1 results later this month, which will include detailed financials like:

• Net interest margin (NIM)
• Asset quality
• Profit after tax
• Cost of funds and provisioning

Until then, investors are left interpreting the topline business indicators shared in the update.

Is this part of a broader banking trend?

Yes, to some extent.

Several other public sector banks have shown a similar pattern in Q1: steady year-on-year growth, but flat or slow quarter-on-quarter changes. This may be due to:

• A tightening interest rate cycle
• Slower demand for fresh credit in sectors like MSMEs
• Seasonal impacts during the April–June period

However, private banks such as HDFC Bank and ICICI Bank have shown stronger deposit growth, raising competitive pressure.

Should investors be worried?

Not necessarily, but caution is warranted.

Union Bank remains a large public sector lender with improving fundamentals, but this Q1 update suggests it may not deliver very strong near-term growth.

If you are a long-term investor, it’s important to wait for the full Q1 earnings and management commentary before making a decision. Those who entered the stock for short-term gains may want to re-evaluate based on current market conditions.

Conclusion

The news that Union Bank shares fell 6 percent after its Q1 update is a clear reminder of how closely markets watch sequential performance. Even when year-on-year numbers look good, investors focus on momentum, and the slight cooling off in growth has caused some concern.

With the full financial report due later this month, market participants will be looking for clarity on profitability, margins, and asset quality. Until then, analyst opinions may stay mixed, and trading could remain volatile.

FAQ’S

Disclaimer

This content is made for learning only. It is not meant to give financial advice. Always check the facts yourself. Financial decisions need detailed research.