City Union Bank is gearing up for the soft commercial launch of its new retail products, including home loans and micro LAP (loan against property), in the fourth quarter of the current financial year, with incremental growth expected in these new offers during the next financial year. The bank will focus on secured products in this portfolio, while also planning to revamp its main gold loan product from floating to fixed interest rates.

After several quarters of negative operating profit growth, the bank reported strong year-over-year growth in the September quarter.

“We have seen significant improvements in credit sourcing efficiencies and our digital transformation has driven solid credit growth,” said N Kamakodi, MD and CEO of CUB during its Q2 earnings call. FY25. He also said that the current growth is mainly driven by traditional business sectors, including MSME and gold lending, while the gradual growth in retail is yet to begin.

He further explained that the bank is building its new retail sector, with technology ready and senior management in place. “The soft commercial launch of the new products is expected during the last quarter of this financial year, starting with secure products. Significant contributions from these new products are expected to begin by FY26,” Kamakodi said. The bank aims to attract new customers (NTB) for its retail products. In South India, branches and field staff will handle procurement, while in North and West regions, third-party channels and Direct Selling Agents (DSAs) will be used. . In-house sourcing will incur minimal costs, while third-party sourcing will involve some operational expenses. “With approximately 550 branches in the South, we expect strong retail business through internal sourcing without heavy reliance on third-party channels in this region,” Kamakodi added.

The bank is targeting a 2-3 percent share of new products in FY26, and plans to increase this to 7-8 percent over the next 2-3 years.

Kamakodi also highlighted healthy growth in gold loans, but mentioned plans to increase fixed-rate loans ahead of the expected rate cut cycle. “Any additional advance on gold loans is now at a fixed rate. Around 25 to 30 percent of our gold loan portfolio has already been converted to fixed rates, and we aim to increase this to 50 percent once the rate cut cycle begins,” he said. he declared. On the strong growth in its NBFC loan portfolio, Kamakodi noted that between June 30 and September 30, the bank saw an incremental growth of ₹315 crore in this segment. Year-on-year, the NBFC book grew by around ₹500 crore, despite redemptions. “We remained focused on returns, with the average return of the NBFC portfolio close to 9-9.5 per cent, slightly lower than our overall average return of 9.5 per cent, without compromising returns to drive growth,” he declared.