Indian Bank vs Union Bank (2026): ROA, NIM, NPAs, Valuation & Which Is Better?

Indian Bank vs Union Bank: Q1 FY2027 scoreboard

Rung one: Indian Bank currently has the better liability franchise

CASA is 39.73% versus Union Bank around 35.10%.

A higher CASA ratio means more of the deposit base sits in low-cost current and savings accounts rather than more expensive term funding.

Indian Bank's Q1 deposit growth was also materially stronger.

Total deposits increased 13.47%.

Union Bank deposits increased only around 3.5%.

That difference matters because both banks continue growing credit at double-digit rates.

Union's weak deposit-growth number requires context

Union Bank has deliberately been reducing dependence on expensive bulk deposits and attempting to improve deposit quality.

CASA ratio improved from the prior-year period even while total deposits grew slowly.

So the 3.5% number is not simply evidence of a failed funding franchise.

It partly reflects a strategic choice:

accept less deposit quantity while improving deposit mix.

That strategy has a limit

Union Bank advances grew approximately 12.5%.

Deposits grew approximately 3.5%.

A bank can remove expensive funding for a period.

It cannot indefinitely compound loans at double digits while deposits remain in low-single-digit growth.

Eventually the bank must grow high-quality deposits faster, increase market borrowing or slow credit expansion.

Rung two: Indian Bank's NIM advantage is large

3.29% versus approximately 2.80%.

The difference is roughly 49 basis points.

That is meaningful across lakh-crore balance sheets.

Indian Bank combines:

• Higher CASA.
• Granular RAM lending.
• Strong deposit repricing.
• Disciplined asset pricing.

to generate a substantially wider spread.

Union Bank's 2.80% NIM is still healthy

Union's margin improved sequentially as deposit costs eased and the liability mix improved.

The important point is relative rather than absolute.

Indian Bank currently earns more spread before operating costs, provisions or taxes enter the equation.

That should theoretically make Indian Bank's ROA much higher.

Yet the eventual gap is only five basis points.

That is where the comparison gets interesting

Indian Bank NIM is 49 basis points higher.

Indian Bank credit cost is 15 basis points lower.

Its cost-to-income ratio is also marginally better.

And yet:

Union Bank ROA is 1.36%, slightly above Indian Bank's 1.31%.

The difference tells us not to equate NIM mechanically with total profitability.

ROA includes the entire banking income statement

Net interest margin is only one part of bank economics.

ROA also reflects:

• Fee income.
• Treasury income.
• Recoveries.
• Operating expenses.
• Provisions.
• Taxes.
• Balance-sheet mix.

Union's broader income statement currently compensates for much of its NIM disadvantage.

But not every piece of that profit bridge can repeat forever

Operating expenses cannot decline indefinitely while the franchise expands.

Credit provisions also cannot fall endlessly once credit cost is already near 0.4%.

The next stage of Union's earnings growth will need a larger contribution from:

• NII growth.
• Loan growth.
• Fees.
• Deposit repricing.

rather than continued improvement below the operating-income line.

Indian Bank's earnings bridge is more conventional

NII increased 16.92%.

Operating profit increased 16.50%.

PAT increased 10.09%.

The first two growth rates are almost identical.

That tells investors Indian Bank's core revenue growth flowed cleanly through operating expenses.

Higher provisions and tax moderated final PAT growth, but the underlying operating engine remained strong.

For recurring earnings quality, Indian Bank's Q1 is easier to extrapolate

Indian Bank does not require an assumption that operating costs keep declining or provision releases continue indefinitely.

Its thesis is simpler:

grow deposits and loans together, maintain a wide NIM, keep operating efficiency strong and allow high ROE to compound book value.

That simplicity itself deserves some valuation premium.

Rung three: operating efficiency is effectively a draw

Indian Bank cost-to-income:

44.80%.

Union Bank:

45.34%.

A half-percentage-point difference is too small to be a decisive advantage.

Both banks have moved well beyond the inefficient cost structures investors historically associated with large PSU banks.

This matters because the comparison is no longer about turnaround survival

A 45% cost-to-income ratio means roughly ₹55 of every ₹100 of operating income remains before provisions and taxes.

Both banks therefore already operate with meaningful efficiency.

Future gains are more likely to come from incremental digital productivity rather than dramatic branch-cost restructuring.

Rung four: Indian Bank has the cleaner credit profile

GNPA is 1.86% versus Union Bank at 2.65%.

NNPA is 0.15% versus 0.47%.

Provision coverage is 98.22% versus 95.05%.

Indian Bank therefore has:

• Fewer recognised bad loans.
• Less unprovided residual stress.
• More complete provisioning against old NPAs.

Union Bank's asset quality is still dramatically better than its old reputation

GNPA has fallen materially year on year.

NNPA remains below 0.5%.

Provision coverage is around 95%.

This is no longer a bank whose valuation should be driven by fear of a giant unprovided legacy NPA pool.

The question now is whether Union can continue improving gross NPA while expanding credit.

Indian Bank's 0.15% NNPA is exceptional

Net NPA this low means the recognised bad-loan book has been provisioned extremely aggressively.

It does not mean future credit risk has disappeared.

New loan vintages can still become stressed.

But old recognised NPAs are unlikely to consume the same proportion of future earnings they did during the historical PSU-bank crisis.

Credit cost reinforces Indian Bank's advantage

Indian Bank: approximately 0.23%.

Union Bank: approximately 0.38%.

Both are excellent.

Indian Bank currently sacrifices less of its operating profit to credit provisioning.

Rung five produces the unexpected result: Union wins ROA

Union Bank: 1.36%.

Indian Bank: 1.31%.

The difference is only five basis points, but directionally Union is ahead.

This is an important reminder that banking profitability cannot be reduced to NIM or NPAs alone.

Indian Bank wins ROE more clearly

19.48% versus 17.23%.

Indian Bank therefore compounds shareholder equity faster at the current quarterly run rate.

This matters especially because common-equity capital is almost identical on a regulatory basis.

CET1 is essentially tied

Indian Bank CET1:

16.51%.

Union Bank:

16.38%.

Those are both very strong common-equity buffers.

Union has the higher total capital ratio at approximately 18.46% versus Indian Bank at 17.58%, but the highest-quality capital layer is nearly identical.

This makes the ROE comparison cleaner

Indian Bank's higher ROE cannot simply be dismissed as the result of carrying dramatically less common equity.

The banks have similar CET1 ratios.

Indian Bank is genuinely producing more current return on shareholder equity.

There is one area where Indian Bank looks materially safer operationally: deposit growth

Indian Bank deposits increased more than 13%.

Union Bank deposits increased only around 3.5%.

Even though Union deliberately improved funding quality, future loan growth requires sufficient liability growth.

This is probably the single most important operating metric for Union Bank over the next several quarters.

Union needs to move from deposit optimisation to deposit expansion

The expensive bulk-funding cleanup has value.

Now the bank must demonstrate it can grow:

• CASA.
• Retail term deposits.
• FCNR deposits.
• Other granular funding.

fast enough to support double-digit credit expansion without materially increasing funding costs.

Indian Bank's funding growth gives it optionality

Deposits and advances are currently growing at almost identical rates.

This means the bank can choose whether to:

• Maintain the current CD ratio.
• Deploy slightly more liquidity into advances.
• Preserve excess funding for future opportunities.

without facing an immediate liability squeeze.

Why does Indian Bank still command the premium?

The market appears to be paying for:

• A wider NIM.
• Much stronger deposit growth.
• Cleaner GNPA and NNPA.
• Higher ROE.
• Lower credit cost.
• A simpler recurring earnings bridge.

The premium therefore has a fundamental basis.

The harder question is whether the premium has become too large.

Union Bank does not need to become Indian Bank for the valuation gap to narrow

If Union can keep:

• ROA around 1.3%.
• ROE in the high teens.
• Cost-to-income below 47%.
• Credit cost below 0.5%.
• GNPA falling.

while restoring deposit growth toward high single digits, a 1.08x book multiple may look conservative.

Indian Bank's upside requires more compounding and less rerating

At 1.54x book, Indian Bank already receives a strong PSU-bank quality premium.

Future shareholder returns therefore depend more heavily on:

• Book-value growth.
• High ROE.
• Dividends.
• Maintaining the premium.

rather than a huge additional expansion in the P/B multiple.

Union Bank has more multiple-expansion optionality

A bank already producing 1.36% ROA but trading only modestly above book does not need dramatic operational improvement for investors to reconsider its valuation.

The problem is that the market may be correctly discounting the liability-growth mismatch.

That makes deposit growth the key variable linking fundamentals to valuation.

The Bull Run market snapshot shows Union has already gained stronger recent momentum

Union's RSI in Bull Run's August 25 snapshot was already above 80, indicating extremely strong short-term momentum.

That is not a fundamental valuation measure, but it does show the rerating thesis is no longer completely undiscovered by the market.

What would make Indian Bank the clear winner from here?

The bank needs to keep demonstrating that the premium valuation reflects a durable operating model.

The confirmation signals are:

• NIM remains above roughly 3.2%.
• ROA stays around 1.3%.
• ROE remains high teens.
• Deposit growth stays aligned with loan growth.
• NNPA remains below 0.2%.

What would make Union Bank the stronger risk-reward?

Union does not need higher NIM than Indian Bank.

It needs to protect current ROA while fixing funding growth.

The important confirmation signals are:

• Deposits accelerate toward 8%-10%.
• CASA remains around 35% or improves.
• NIM holds near 2.8%.
• ROA remains above 1.25%.
• GNPA keeps declining.
• Cost-to-income remains below 47%.

Indian Bank vs Union Bank FAQs

Which bank is larger?

Union Bank, with approximately ₹12.83 lakh crore of deposits versus Indian Bank at ₹8.45 lakh crore.

Which is growing loans faster?

Indian Bank slightly, at approximately 13.89% versus Union Bank around 12.5%.

Which is growing deposits faster?

Indian Bank by a wide margin, approximately 13.47% versus Union Bank around 3.5%.

Which has higher NIM?

Indian Bank at 3.29% globally versus Union Bank at approximately 2.80%.

Which has higher ROA?

Union Bank slightly, at approximately 1.36% versus Indian Bank at 1.31%.

Which has higher ROE?

Indian Bank at 19.48% versus Union Bank at 17.23%.

Which has better asset quality?

Indian Bank, with materially lower GNPA and NNPA.

Which has stronger CET1?

They are effectively tied: Indian Bank around 16.51% and Union Bank around 16.38%.

Which stock is cheaper?

Union Bank on both late-August P/E and P/B.

Where can investors compare them on Bull Run?

Use the Indian Bank stock page, Union Bank stock page and Public Sector Bank sector page.

Research sources

• Bull Run — Indian Bank
• Bull Run — Union Bank
• Bull Run — Public Sector Bank sector research
• Indian Bank official Q1 FY2027 results
• Union Bank official Q1 FY2027 results and investor presentation
• Indian Bank late-August valuation data
• Union Bank late-August valuation data