Union Bank receives AAA rating for infrastructure bonds

Union Bank of India has received a CARE AAA rating with stable outlook from CARE Ratings Limited for its proposed ₹10,000 crore infrastructure bonds. The agency also reaffirmed ratings for the bank’s existing perpetual and Tier-II bonds, citing strong capitalisation, improving asset quality, and government backing.

Union Bank of India has received a top-tier credit rating from CARE Ratings Limited for its infrastructure bond issuance, highlighting the bank’s stable financial profile and strong market position.

The rating agency assigned a CARE AAA rating with a stable outlook to the bank’s ₹10,000 crore infrastructure bonds and reaffirmed ratings for other debt instruments as part of its latest review on March 13, 2026.

Rating Actions Across Debt Instruments

CARE Ratings evaluated multiple instruments issued by the bank totaling ₹13,200 crore.

Instrument Amount (₹ crore) Rating Rating Action

Infrastructure Bonds 10,000 CARE AAA; Stable Assigned

Perpetual Bonds 1,000 CARE AA+; Stable Reaffirmed

Tier-II Bonds 2,200 CARE AAA; Stable Reaffirmed

Strong Market Position

Union Bank remains one of India’s largest public sector lenders. The rating reflects its strong franchise and systemic importance in the Indian banking sector.

Key highlights include:

Fifth largest public sector bank in India

74.76% government ownership

8,671 branches across India

8,300 ATMs and two overseas branches

The bank’s widespread network and government backing provide strong support to its credit profile.

Improving Financial Metrics

CARE Ratings highlighted improvements in the bank’s financial health, particularly in asset quality and capital strength.

Financial Metric Dec 31, 2025 Mar 31, 2025

Capital Adequacy Ratio (CAR) 16.49% 18.02%

CET-I Ratio 13.94% —

Tier-I Ratio 15.06% —

Gross NPA 3.06% 3.60%

Net NPA 0.51% 0.63%

The bank’s gross non-performing assets (GNPA) declined to 3.06%, reflecting stronger asset quality and improved risk management.

Profitability and Business Growth

For the nine months of FY26, Union Bank reported:

Net Profit: ₹13,381 crore

Total Income: ₹93,576 crore

Return on Total Assets (ROTA): 1.20%

However, the bank’s net interest margin (NIM) declined slightly to 2.44% from 2.64% a year earlier due to faster repricing of advances compared with deposits.

Capital Strength and Fundraising Plans

The bank continues to maintain strong capitalisation levels above regulatory requirements.

Its capital base was strengthened by ₹8,000 crore raised in FY24 through a Qualified Institutional Placement (QIP).

The board has also approved plans to raise ₹6,000 crore in FY26 through a mix of:

Equity issuance

Additional Tier-I bonds

Tier-II bonds

Rating Outlook

CARE Ratings’ stable outlook indicates expectations that Union Bank will maintain steady loan growth, stable asset quality, and healthy profitability.

However, the rating agency noted that improving the CASA (Current Account Savings Account) ratio, currently at 33.94%, and maintaining asset quality in line with peer banks remain key factors to watch.