Shares of public sector undertaking (PSU) banks are back into action after last week's robust rally as most of the banks such as Union Bank of India, Oriental Bank of Commerce, Syndicate Bank and Punjab National Bank (PNB) were up more than 5% each. State Bank of India (SBI), Indian Bank, Canara Bank, IDBI Bank, Bank of Baroda, Allahabad Bank, Bank of India and Andhra Bank were up in the range of 2% to 5% on the National Stock Exchange (NSE). At 10:11 AM; Nifty PSU Bank index, an index of state-owned banks, was the largest gainer among sector indices, up 3% at 3,934 after hitting 3,986 in intra-day trade. On comparison, Nifty Private Bank, Nifty Bank and the benchmark Nifty 50 index were up less than 1% each on the NSE. Among the individual stocks, Canara Bank was up 6% to Rs 428, bouncing back 7.5% from its early morning low of Rs 398 on the BSE. The assets quality of the bank has improved on sequential basis with the ratio of gross non-performing assets (NPAs) and net NPAs in September 2017 quarter (Q2F&18). The ratio of gross NPAs to gross advances stood at 10.51% as on Q2FY18 as against 10.56% as on Q1FY18. The ratio of net NPAs to net advances stood at 7.02% as against 7.09% in June quarter. Inspite of the headwinds in NPA resolution, we could keep the slippages under control and resultantly, the NPA ratios have showed some improvement.
Out acute focus on NPA management would continue unabated and we expect the net NPA level to decline to below 6% level by the year-end, said Rakesh Sharma, MD &CEO of Canara Bank. On Wednesday, October 25, 2017, Nifty PSU Bank index had zoomed 30%, recorded its biggest single-day spurt ever after the Cabinet nod a day earlier to Rs 2.11-lakh-crore bank recapitalisation plan and Rs 6.92-lakh-crore highway construction project. “The government’s announcement of the Rs 2.11 lakh crore recapitalization plan for public sector banks (PSBs) comes as a concrete and timely move that provides much needed relief for the PSBs which are ailing under asset quality pressures and sluggish credit growth and is a credit positive step,” according to rating agency CARE Ratings. Currently, the Indian banking sector remains moderately capitalized. Although, subdued credit growth over the last three years has kept requirement of growth capital low, increase in provisioning due to deterioration in asset quality has impacted the capital adequacy especially for public sector banks. This announcement is critical in the light of many PSBs requiring capital infusion to meet the minimum regulatory requirement, CARE Ratings said in a note.
|UNION BANK (I)||187.55||175.55||6.8|
|PUNJAB NATL. BANK||207.15||196.25||5.6|
|PUN. & SIND BANK||52.10||49.90||4.4|
|BANK OF INDIA||188.15||180.25||4.4|
|BANK OF BARODA||181.25||174.30||4.0|
|UNITED BANK (I)||19.70||19.20||2.6|
|I O B||26.45||25.85||2.3|
|ST BK OF INDIA||316.60||310.95||1.8|