Export Recovery to Face Delays Amid U.S. Tariff Dispute: CUB MD

Fast Summary

• City Union Bank’s Growth Plans: Teh bank aims too grow 2-3% above the industry’s growth rate in the current financial year, per CEO N.Kamakodi.
• MSMEs and U.S. Tariffs: MSMEs exporting to the U.S., impacted by a 25% tariff, are focusing on diversification into other markets and increased reliance on domestic business. Rupee depreciation provides a cushion for exports to non-U.S. regions.
• Loan Book Composition: Around ₹1,200 crore of City Union Bank’s ₹55,000-crore MSME loan book is tied to export-oriented businesses; ₹200 crore of this focuses on U.S.-centric exports.
• Financial Performance Update: The bank recorded 14% credit growth for FY 2024-2025 and achieved 16% credit growth in Q1 FY 2025-2026 across all sectors. deposits grew by an impressive 20% during the same period.
• CASA Deposit Growth: Incremental growth in CASA deposits stands at ₹500 crore from Q4 FY 2024-2025 to Q1 FY 2025-2026.
• Non-Performing Assets (NPA): Gross and net NPAs have been consistently declining over the past 8-10 quarters, with expectations for continued improvement.
• Leadership Transition Required: CEO N. Kamakodi must step down by April 30, 2026 due to regulatory mandates after serving as MD for over a decade. Succession planning will commence October.

Indian Opinion Analysis

The outlined economic strategies of City Union Bank reflect broader shifts within India’s banking sector amidst complex global trade dynamics and domestic structural adjustments.The MSME sector’s resilience under high U.S tariffs-supported by rupee depreciation-highlights adaptability but underscores inherent vulnerabilities when reliant on external markets like the United States.

City Union Bank’s robust deposit growth combined with steady credit expansion signals strong consumer confidence despite previous industry-wide challenges related to deposit accumulation last fiscal year-a promising trend amid broader economic recovery efforts post-pandemic disruptions.

The declining trend in non-performing assets serves as a positive indicator of improving asset quality across sectors reflective not only of internal financial discipline but also stronger performances from borrowers like MSMEs adapting rapidly under tough conditions.

Looking ahead toward leadership succession planning at City Union Bank post-April ’26 may offer potential shifts yet respecting neutrality deeper transitional policy impacts await real test rollout amongst operational metrics dynamics banking scale/depth re evaluations

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