CRISIL has reaffirmed 'CRISIL A1+' rating on the certificate of deposit programme of City Union Bank (CUB). The rating continues to reflect CUB's adequate capitalisation and above-average earnings profile. These rating strengths are partially offset by the bank's average asset quality, average resource profile, and small scale of operations with geographic concentration.

CUB has adequate capitalisation; its tier-I capital adequacy ratio (CAR) was above 11.5% and overall CAR was above 12.5% over the past five years. The bank's business registered a compounded annual growth rate of 14.4 % during the period. CUB had an adequate absolute net worth of around Rs.26.5 billion as on December 31, 2014 (Rs.20.2 billion as on March 31, 2014). Its net worth coverage for net non-performing assets (NPAs) was comfortable, at 12 times, as on the same date. CUB's earnings are stable and provide adequate accruals.

The bank raised equity capital of around Rs.3.5 billion during the quarter ended June 30, 2014, through a qualified institutional placement (QIP) at a price to book ratio of 2 times. In the past, CUB has raised equity capital through rights issue or preferential issue as and when required, to support growth. In view of healthy accruals and demonstrated ability to raise equity, CRISIL believes that CUB's capitalisation will remain adequate over the medium term.

Shares of the company gained Rs 0.4, or 0.42%, to trade at  Rs 95.80.  The total volume of shares traded  was  6,247 at the BSE (12.06 p.m., Tuesday).