Full Credit, No Debit!

HIS FORMAL EXIT from the bank is scheduled for 30 April 2026. “It has been 14 years since you gave your approval for my appointment as MD & CEO of this prestigious institution with over 100 years of legacy. Yes, time flies,” he remarked in a note addressed to the stakeholders of the company.

FROM LEDGERS TO AI
Kamakodi’s association with CUB began in June 2003 when he was appointed Deputy General Manager in charge of Human Resources & Planning. Over the years, he moved through key leadership roles – General Manager – Advances; Executive Director and Executive President, before taking over as MD & CEO on 1 May 2011. Reflecting on the state of the bank at the time, Kamakodi recalled how branches operated with man­ual ledgers and rudimentary computing tools such as Advanced Ledger Posting Machines (ALPMs) on DoS platforms. Core Banking with TCS Quartz was still in its infancy. From there, he had a front-row seat to the metamorphosis of India’s banking sector, witnessing the rollout of Core Banking Systems (CBS), ATMs, In­ternet, mobile banking and, of course, the recent wave of API-driven, AI/ML- enabled digital lending systems.

“The banking landscape has undergone a significant change, becoming more competitive and challenging. Through these two decades, the economy went through major upheavals – from the 2008 global financial crisis to GST roll-out and demonetisation and COVID-19,” he said, noting that CUB’s strong risk management culture enabled it to weather the storms with minimal impact. When Kamakodi joined the bank, it had a net worth of Rs 165 crore (FY2003) and a market cap of just Rs 100 crore. Much water has flown under the bridge since then. CUB had worked its way up, and by FY23, it managed to align itself with regulatory expectations of a Rs 300 crore minimum net worth. Indeed, the bank had striven to maintain consistency not only in growth and its finan­cial parameters, but also in its operational efficiency.

PREFERENTIAL ALLOTMENT
A key milestone in that journey was the preferential allotment of shares to institutions such as Larsen & Toubro, LIC and other FIIs in 2008, which catalysed the bank’s next phase of growth. CUB’s market capital­isation touched Rs 1800 crore in 2021 and moved up to scale the Rs 10,000-crore mark during 2018. It crossed the Rs 15,000-crore mark by June 2025. By FY24, City Union Bank edged past Rs 1lakh crore in total business and breached the Rs 1000-crore mark in net profit for the first time.

The credit growth crossed 14 per cent for FY25 and RoA (return on assets) and profitability parameters crossed pre-COVID levels. The branch network, which was 123 in 2003, doubled to 246 in 2011 and further expanded to 875 as on 31 March, 2025.

A CHALLENGING TASK
“Being a third-generation employee of the bank gave me a deep connection with its people and culture. It was a challenge to follow in the footsteps of my late father V Narayanan, whose leadership from 1980 to 2004 firmly established the bank’s stature in the industry. His successor and my mentor S Balasubramanian further strengthened this legacy,” said Kamakodi.

AIMS TO OUTGROW INDUSTRY
The June 2025 quarter turned out to be a milestone for the old private sector lender, as it crossed the Rs 300-crore quarterly net profit mark for the first time in its history. The management is optimistic of sustaining the momentum, citing strong credit growth, improving asset quality and early success in retail diversification. The bank has returned to its long-term average levels in key performance metrics, including credit growth, profit after tax , return on equity and net interest margin. Notably, the bank recorded positive credit growth in Q1 of FY25, marking the first such instance in a decade. Rid­ing on that recovery, CUB sustained double-digit credit growth across all four quarters of FY25. For Q1 FY26, credit growth surged to 16 percent year-on-year, with advances increasing from Rs 46,548 crore to Rs 54,020 crore — the highest June-to-June growth seen so far.

“Growth acceleration is clearly visible, and we are seeing good traction across key business parameters. Slippages have come down sequentially from Q4, and despite industry-wide concerns, we have not faced any material stress so far. We are closely monitor­ing the situation and are confident of maintaining growth and profitability,” said Kamakodi. Margins are expected to stabilise from Q3 onwards, helped by an anticipated improvement in the credit-deposit ratio and the recent CRR cut.

RETAIL LENDING GAINS GROUND
According to Executive Director R Vijay Anandh, the bank’s digital initiatives have restored credit growth consistency. The bank, he said, was actively exploring new avenues for advances growth beyond its tradition­al MSME base. “The retail engine has begun delivering solid numbers from both branches and DSAs. In the last quarter alone, we disbursed around Rs 825 crore across these segments. Overall, our retail plans have taken off well,” said Anandh. The bank now aims to expand its affordable housing and micro LAP offerings further through this network, especially in under­banked and rural areas.

GOLD LOANS SHINE
CUB sees strong potential in gold loans, which Ka­makodi described as particularly attractive in the current environment. “Gold loans are yielding well. They are fixed-rate products and insulated from the declining interest rate scenario,” he said. Regulatory clarity has also removed previous uncertainties in this segment. As of June 2025, CUB’s gold loan portfo­lio stood at Rs 15,053 crore, up from Rs 11,463 crore in June 2024. The agricultural gold loan segment grew from Rs 6442 crore to Rs 7620 crore. The non-agricultural segment rose from Rs 5021 crore to Rs 7433 crore. The share of gold loans in gross advances climbed from 25 per cent in June and September 2024 to 28 per cent in June 2025.

Commenting on the recent US tariff hike on certain exports, Kamakodi noted that most of the bank’s tex­tile clients cater primarily to the European market. Only about 20 per cent of the bank’s textile exposure, around Rs 1200 crore is tied to the US. “Initial feed­back suggests a 2–3 per cent margin compression, but it remains manageable. Many exporters have already begun diversifying to Europe to reduce risk,” he said, adding that the bank sees no immediate cause for concern.

CAUTIOUSLY OPTIMISTIC
On the macro front, CUB remains cautiously optimis­tic, amid ongoing global uncertainties and sectoral concerns in certain geographies like Karnataka, where the bank has limited exposure. “We expect to end the year on a strong note, with healthy growth and robust asset quality,” said Kamakodi. Reflecting on his jour­ney, he added, “The bank’s successful technological transformation, our alignment with industry trends and the ability to sustain profitability while reshap­ing HR practices for the future fill me with pride and gratitude.” As he prepares to pass the baton, Kamakodi expressed heartfelt optimism for the bank’s continued success.