City Union Bank share price tumbles after RBI finds divergence of Rs 259 crore gross NPAs

The divergence to the tune of Rs 259 crore consists of 13 borrower accounts with an outstanding balance of more than Rs 1 crore for an amount of Rs 230 crore and 218 borrowers with an outstanding balance of less than Rs1 crore for an amount of Rs 29 crore.

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City Union Bank share price was trading lower by 6 percent in the morning session on December 21, a day after the private sector lender said the Reserve Bank of India (RBI) found Rs 259-crore divergence in additional gross non-performing assets (GNPAs) in the fiscal year 2022.

The divergence consists of 13 borrower accounts with an outstanding balance of more than Rs 1 crore for an amount of Rs 230 crore and 218 borrowers with an outstanding balance of less than Rs 1 crore for an amount of Rs 29 crore.

“As per its final report on Risk Assessment, the RBI has reported divergence in additional gross non-performing assets (NPA) for the said financial year amounting to Rs 259 crore,” the bank said.

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RBI conducted an on-site inspection for the supervisory evaluation for the financial year 2021-22 from October 7 to November 18.

At 9.38 am, City Union Bank was quoting at Rs 179.40, down Rs 9.50, or 5.03 percent on BSE.

Research firm Investec, however, has a buy rating on the stock, with the target at Rs 240 a share, an upside of 34 percent from current market price. It is of the view that divergence would have no material impact on estimates. The bank has enough headroom to provide and yet meet “our estimates” for FY23, the research firm said.

The bigger risk was the pending RBI nod for reappointment of CEO N Kamakodi, it said.

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