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PSU Bank Stocks Surge as Indian Overseas Bank, Union Bank Post Strong Q3 Performance

Prime Highlights

  • Indian Overseas Bank reported strong profit growth for the December quarter, lifting its shares in early trade.
  • Union Bank of India saw a sharp rise in its stock price after reporting better asset quality and steady earnings.

Key Facts

  • Indian Overseas Bank’s net profit rose 56.2% year-on-year to ₹1,365 crore in Q3 FY26.
  • Union Bank of India’s shares jumped up to 8%, while the stock has gained around 70% over the past year.

Background:

Shares of public sector lenders witnessed strong buying interest on Wednesday after Indian Overseas Bank and Union Bank of India reported encouraging financial performance for the December quarter of FY26.

Indian Overseas Bank shares gained close to 4% in early trading after the bank reported strong profit growth. The lender recorded a net profit of ₹1,365 crore for the third quarter, compared with ₹873.7 crore a year earlier, showing a rise of over 56%. The strong quarterly performance helped lift investor sentiment and supported gains in the stock.

At the same time, Union Bank of India was among the top-performing PSU bank stocks, with its shares rising by as much as 8% during the day. The stock moved higher after the bank reported better asset quality and stable earnings for the October–December quarter.

Union Bank’s slippages declined to ₹1,853 crore at the end of the December quarter, compared with ₹2,151 crore in the September quarter, reflecting better credit quality. The bank also reported a sequential improvement in its non-performing assets. Gross NPAs eased to 3.06% from 3.29% in the previous quarter, while net NPAs improved to 0.51% from 0.55%.

In absolute terms, Union Bank’s gross NPAs reduced to ₹31,121 crore from ₹32,085 crore quarter-on-quarter, while net NPAs declined to ₹5,102 crore from ₹5,209 crore.

Union Bank reported a net profit of ₹5,017 crore for the December quarter, up 9% from ₹4,604 crore in the same quarter last year. Its net interest income showed little change, rising 1% year-on-year to ₹9,328 crore.

Following the results, Union Bank shares were up 7.6% at ₹178.8 after hitting an intraday high of ₹180. The stock has gained about 70% over the past year.

Strong quarterly results from both banks lifted sentiment across public sector lenders, as investors reacted positively to better earnings and improving asset quality.