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* Growth visibility healthy; Momentum to Continue: CUB’s growth engine has started to fire, and the management is confident of the momentum to continue, supported by healthy growth visibility in its core segments. Thus, the management has indicated that barring any macro uncertainties, CUB will continue to deliver ~15-16% credit growth in FY26. The bank is on track to ramp up its retail portfolio with a focus on Home Loans, Affordable Housing, and LAP. We expect CUB to deliver a healthy 15% CAGR credit growth over FY25-28E.

* NIMs to be Defended at 3.5% for FY26: Despite ~70% of CUB’s portfolio being floating rate (of which ~48% is EBLR-linked), the management remains confident of defending margins at 3.5% in FY26. The impact of the Jun’25 rate cut would reflect on Q2 margins (expected to range between 3.45-3.5%); however, as the rate actions on deposits reflect in the CoF, NIMs are expected to find support. The bank has reduced its TD rates in Apr’25 and has taken rate action on SA deposits in Jun’25, the benefit of which will reflect meaningfully from H2 onwards. Moreover, the bank had given certain customers loans at discounted rates, and the pass-on of the repo rate cut to these customers would be lower. We expect a NIM delivery in FY26 to be in line with the guidance, with improvement likely in FY27. Margins are likely to hover between 3.5-3.6% over FY26-28E.

* Strong RoA Delivery to Continue: We expect CUB’s superior RoA delivery on 1.5-1.6% over the medium term to continue supported by (1) Buoyant growth sustaining, (2) Ability to maintain NIMs in a narrow range of 3.5-3.6%, (3) Strong and improving Asset quality, keeping credit costs under control and (4) Gradual improvement in Opex ratios. Near-term challenges on margins would be visible; however, we believe CUB remains well poised to deliver a strong Advances/NII/Earnings growth of 15% each over FY25-28E. Sustenance of growth trends should drive stock performance.

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