Union Bank of India (UBI) announced that CARE Ratings Limited (now CareEdge Ratings) has reaffirmed the ratings for its various debt instruments as of March 13, 2026. Ratings for Tier-1 and Tier-2 Bonds were reaffirmed, while the new Infrastructure Bonds were assigned a rating. The stable outlook reflects expectations of steady growth, maintained profitability, and stable asset quality, supported by strong government ownership.
Rating Actions Confirmed by CareEdge Ratings
Union Bank of India (UBI) disclosed that CARE Ratings Limited (CareEdge Ratings) has assigned or reaffirmed ratings for several key debt instruments on March 13, 2026. The ratings reflect the bank’s comfortable capitalization levels and expected continued support from the Government of India (GOI), which remains a key rating sensitivity.
Summary of Assigned and Reaffirmed Ratings
| Instrument | Rating Assigned | Outlook | Action |
|---|---|---|---|
| Additional Tier-1 Bond (ISIN: INE692A08029) | AA+ | Stable | Reaffirmed |
| Tier-2 Bond (ISIN: INE692A08219) | AAA | Stable | Reaffirmed |
| Tier-2 Bond (ISIN: INE692A08201) | AAA | Stable | Reaffirmed |
| Infrastructure Bond | AAA | Stable | Assigned |
Key Drivers Supporting Ratings Stability
Majority Ownership and GOI Support
GOI remains the majority shareholder, holding 74.76% as of December 31, 2025. The bank’s systemic importance as one of the largest Public Sector Banks (PSBs) assures expected timely capital and operational support from the GOI. The bank raised significant equity capital of approximately ₹8,000 crore in FY24 through QIP, aligning its structure with regulatory requirements.
Financial Health and Profitability
Ratings are supported by UBI’s comfortable capitalization, with the Capital Adequacy Ratio (CAR) reported at 16.49% as of December 31, 2025. While asset quality has shown improvement (GNPA ratio stood at 3.06% as of December 31, 2025), profitability is expected to face near-term pressure due to the faster repricing of advances compared to deposits, leading to a projected moderation in Net Interest Margin (NIM).
Franchise Strength and Liquidity
UBI is the fifth-largest PSB following the amalgamation of Corporation Bank and Andhra Bank. It boasts a vast network of 8,671 branches as of December 31, 2025. Furthermore, liquidity is rated as Strong, with the Liquidity Coverage Ratio (LCR) standing at 123.64%, significantly above the 100% regulatory minimum.
Factors Moderating Ratings
Weaknesses noted include a moderate resource profile compared to peers, characterized by a lower proportion of Current Account Savings Account (CASA) deposits, which stood at 33.94% as of December 31, 2025. Sustained deterioration in asset quality, specifically if the Net Non-Performing Assets (NNPA) ratio remains above 3%, could individually lead to a negative rating action.
Source: BSE
