This PSU Bank Stock Rises 408% in 5 Years: How a Bad Loan Clean-Up Paid Off

This PSU bank stock has turned Rs 1 lakh into approximately Rs 5.08 lakh in five years. A Mumbai headquartered public sector lender delivered a 5-year return of 407.92%, ranking 21st in a screen of 101 large-cap and mid-cap NSE shares as of 10 September 2026.

The company is Union Bank of India (NSE: UNIONBANK), one of the largest government-owned banks in the country with a global loan book of around Rs 10.96 lakh crore. The Union Bank of India share price closed near Rs 179.20 on 10 September 2026, down about 2.55% from the previous close of Rs 183.89, and roughly 13% below its 52-week high of Rs 205.49.

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How Much Has This PSU Bank Stock Returned?

This PSU bank stock has returned approximately 408% in five years, but the gains are heavily concentrated in the early part of that window. The 1-year return of 31.37% is healthy yet only mid-table, and the 1-month return of 0.19% ranks near the bottom of the screen.

Here is how the PSU bank stock has performed across time frames, with its rank in a screen of 101 NSE stocks:

Period	Return	Rank (out of 101)
1 Month	0.19%	97
6 Months	6.93%	84
1 Year	31.37%	48
3 Years	71.05%	60
5 Years	407.92%	21

The pattern is clear. The 3-year return of 71.05% means most of the five-year wealth creation happened between late 2021 and 2023, when the bank was emerging from a heavy bad loan cycle. Since then, this PSU bank stock has moved in a slower, more earnings-linked way.

There was no stock split or bonus issue in the five-year window, so the 407.92% figure for this PSU bank stock reflects real price appreciation. Working backwards from the current price, the share traded near Rs 35 in September 2021, which matches its trading range at that time.

Why Did This PSU Bank Stock Rise 408% in 5 Years?

The short answer: a deep balance sheet clean-up, a more than six-fold jump in annual profit and a re-rating of government-owned lenders as a group. This PSU bank stock began the period trading well below book value with double-digit bad loans and ended it as a steady, dividend-paying earner.

Bad Loans Fell From 13.74% to 2.65%

In March 2021, gross NPA stood at 13.74% and net NPA at 4.62%, soon after the merger of Andhra Bank and Corporation Bank into Union Bank. By June 2026, gross NPA had dropped to 2.65% and net NPA to just 0.47%, with a provision coverage ratio of around 95%.

For a PSU bank stock, that clean-up mattered more than anything else. As old stressed loans were recovered or written off, provisions fell sharply and profits could finally flow through to shareholders. The slippage ratio improved to 0.82% in Q1 FY27 from 0.99% a year earlier.

Profit Multiplied More Than Six Times

Net profit rose from Rs 2,906 crore in FY21 to Rs 5,232 crore in FY22, Rs 17,987 crore in FY25 and a record Rs 18,697 crore in FY26. Return on assets climbed from 0.47% in FY22 to 1.26% in FY25 and 1.36% in Q1 FY27.

For a PSU bank stock, crossing the 1% ROA mark is a meaningful milestone. It signals that the bank earns enough to fund growth from internal accruals, rather than relying on fresh capital from the government.

Re-rating of the PSU Bank Pack

Almost every PSU bank stock was deeply out of favour in 2020 and 2021. As bad loans fell across the sector and credit growth picked up, investors re-rated the whole group, and the Nifty PSU Bank index hit fresh record highs, including in January 2026 after strong December quarter results.

Union Bank gained about 8% in a single session in January 2026 after reporting a Q3 FY26 net profit of around Rs 5,017 crore with better asset quality. This PSU bank stock also touched a 52-week high alongside peers such as Bank of Maharashtra, Indian Bank and Bank of India during that phase.

Recent Drivers: Profit Growth and Fee Income

The most recent push for this PSU bank stock came from Q1 FY27 numbers released in July 2026. Standalone net profit rose 29.5% year on year to Rs 5,332 crore, net interest income grew 10.1% to Rs 10,037 crore and fee-based income jumped about 45% to Rs 3,215 crore.

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How Have the Bank's Core Metrics Changed?

The table below captures the five-year transformation behind this PSU bank stock, using full-year figures for FY21, FY22, FY25 and FY26 and the latest quarter for FY27.

Metric	FY21	FY22	FY25	FY26	Q1 FY27
Net Profit (Rs Cr)	2,906	5,232	17,987	18,697	5,332
Gross NPA	13.74%	11.11%	3.60%	2.82%	2.65%
Net NPA	4.62%	3.68%	0.63%	0.48%	0.47%
NIM	NA	2.94%	2.91%	2.70%	2.80%
ROA	NA	0.47%	1.26%	NA	1.36%

Two things stand out for this PSU bank stock. Asset quality has improved every single year, and profit growth has slowed sharply in the last year. FY26 net profit rose only about 3.9%, because margins came under pressure after interest rate cuts and the bank deliberately shed costly bulk deposits.

Quarterly Financial Trend

The quarterly numbers for this PSU bank stock show profit stepping up through FY26 and holding at a higher level in the June 2026 quarter.

Quarter	Total Income (Rs Cr)	Net Profit (Rs Cr)	Net Profit Margin
Jun 2025	31,968	4,137	16.34%
Sep 2025	31,755	4,281	16.89%
Dec 2025	32,002	5,029	18.91%
Mar 2026	32,675	5,334	20.63%
Jun 2026	32,660	5,368	20.57%

For this PSU bank stock, total income has been nearly flat at around Rs 32,000 crore per quarter, so the profit gains came from lower provisions, higher fees and tighter cost control rather than from a big jump in interest earnings. The figures in this table may differ slightly from the reported standalone numbers due to classification.

Loans, Deposits and Margins

Global advances grew 12.5% year on year to Rs 10.96 lakh crore in June 2026, with domestic advances up 13.1% and retail loans up 12.1%. Retail, agriculture and MSME loans now form the bulk of the domestic book.

Deposits are the weak spot for this PSU bank stock. Global deposits grew only 3.5% to about Rs 12.83 lakh crore, well below the 8% to 9% guidance, though the CASA ratio improved to 35.10% from 32.52%. NIM recovered to 2.80% in Q1 FY27 from 2.64% in Q4 FY26.

Who Owns This PSU Bank Stock?

The Government of India holds 74.76% of the bank, a level that has stayed unchanged for several quarters. That keeps this PSU bank stock squarely under state ownership, with the public float at approximately 25%.

Foreign institutions have been adding this PSU bank stock slowly. FII holding rose from about 6.9% in September 2024 to 7.9% in September 2025 and around 8.63% in the latest disclosure. Domestic institutions, led by insurers and mutual funds, hold close to 12%, while retail investors own about 4.63%.

Rising FII interest in a PSU bank stock usually reflects confidence in asset quality and dividend payouts. A limited free float, however, also means large block trades or any future government stake sale can move this PSU bank stock sharply.

What Does the Valuation Look Like?

The Union Bank of India share trades at a PE of around 6.78 against an industry PE of about 12.25, and at approximately 1.06 times book value of Rs 173.63. Return on equity is around 15.57%, and the dividend yield is about 2.73% after a Rs 5 per share dividend for FY26.

A low multiple is common for a PSU bank stock, because investors price in government ownership, slower deposit franchises and the risk of policy-driven lending. The discount this PSU bank stock carries to private banks has narrowed over five years but has not closed.

What Are the Risks for This PSU Bank Stock?

The biggest risk for this PSU bank stock is deposit growth. With deposits growing at just 3.5% against loan growth of 12.5%, the bank will need to raise funds at higher cost if the gap persists, which could squeeze margins again.

Second, margins remain thin for a PSU bank stock of this size. A NIM of 2.80% is lower than many peers, and further repo rate cuts could push lending yields down faster than deposit costs. Treasury income also fell about 54.5% year on year in Q1 FY27, showing how volatile non-interest income can be.

Third, profit growth has already slowed. With gross NPA at 2.65% and provisions near 95%, the easy gains from falling credit costs are largely over. Any fresh stress in MSME or unsecured retail loans could hit the Union Bank of India share price quickly.

Finally, government ownership brings its own risks to any PSU bank stock, including possible stake sales, leadership changes and pressure to support policy lending. This PSU bank stock is also sensitive to broader market swings, as the 1-month rank of 97 out of 101 shows.

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Union Bank of India Share: Analyst View

Analysts see Union Bank as a PSU bank stock with steady earnings with a clean balance sheet, but most are cautious about growth from here. The key debates are deposit mobilisation, margin recovery and whether ROA can hold above 1.3%.

For this PSU bank stock, management has guided for credit growth of around 12% to 13% in FY27. If the bank delivers that growth while keeping NIM near 2.8%, earnings can keep rising. If deposits keep lagging, however, this PSU bank stock may stay range-bound.

Union Bank of India Share Price Target

After the Q1 FY27 results, a foreign brokerage maintained a neutral rating with a Union Bank of India share price target of Rs 195, roughly 9% above the current price of Rs 179.20. This PSU bank stock already touched Rs 205.49 within the last year, so that target sits below the recent peak.

On the downside, the 52-week low of Rs 126.61 marks the lower end of the past year's range. Investors tracking the Union Bank of India share price target should watch whether the stock can reclaim the Rs 205 zone on the back of the next set of results.

No Union Bank of India share price target can account for sudden changes in interest rates or asset quality, so any target should be treated as a reference point, not a forecast.

Conclusion

This PSU bank stock rose approximately 408% in five years because the bank cleaned up its loan book, multiplied its profit more than six times and benefited from a sector-wide re-rating. Most of that rally, however, happened in the first half of the window.

Today, the Union Bank of India share price reflects a solid but slower-growing PSU bank stock, trading at around 6.8 times earnings with a 2.73% dividend yield. For this PSU bank stock, the next leg will depend on deposit growth, margin recovery and stable asset quality, so investors should weigh both the value on offer and the growth risks before deciding.

Frequently Asked Questions

Which PSU bank stock rose 408% in 5 years?

Ans. Union Bank of India (NSE: UNIONBANK) is the PSU bank stock that gained approximately 407.92% over five years as of 10 September 2026. It ranked 21st out of 101 large-cap and mid-cap NSE stocks in the 5-year return screen.

Why did the Union Bank of India share price rise so much in 5 years?

Ans. The rise came from a sharp fall in bad loans, with gross NPA dropping from 13.74% in March 2021 to 2.65% in June 2026. Net profit grew from Rs 2,906 crore in FY21 to Rs 18,697 crore in FY26, and PSU banks as a group were re-rated.

What is the Union Bank of India share price today?

Ans. The Union Bank of India share price closed near Rs 179.20 on 10 September 2026, down about 2.55% for the day. Its 52-week range is Rs 126.61 to Rs 205.49.

What is the Union Bank of India share price target?

Ans. A foreign brokerage maintained a neutral rating with a target of Rs 195 after the Q1 FY27 results. That is about 9% above the current price but below the 52-week high of Rs 205.49.

How did Union Bank of India perform in Q1 FY27?

Ans. Standalone net profit rose 29.5% year on year to Rs 5,332 crore, and net interest income grew 10.1% to Rs 10,037 crore. NIM improved to 2.80%, gross NPA fell to 2.65% and ROA stood at 1.36%.

Is Union Bank of India share undervalued?

Ans. It trades at a PE of about 6.78 versus an industry PE of 12.25 and around 1.06 times book value. The discount reflects slower deposit growth, thinner margins and government ownership, so a low multiple alone is not a reason to invest.

What are the main risks for Union Bank of India?

Ans. Deposits grew only 3.5% in Q1 FY27 against loan growth of 12.5%, which could raise funding costs. Thin margins, volatile treasury income and possible government stake sales are other key risks.

Does Union Bank of India pay a dividend?

Ans. Yes. The board recommended a dividend of Rs 5 per share for FY26, which gives a dividend yield of approximately 2.73% at the current price.