PSU Bank index hits over 10-yr low; Canara Bank tanks 38% thus far in 2020

Shares of public sector banks (PSBs) reeled under pressure with Nifty PSU Bank index hitting an over 10-year low on the National Stock Exchange (NSE) on Wednesday on growth concerns.

At 02:23 pm, Nifty PSU Bank index was down 2.2 per cent at 1,841 points, as compared to a 1.3 per cent decline in the Nifty50 index. The PSU bank index hit an intra-day low of 1,817, its lowest level since April 13, 2009.

Thus far in the calendar year, 2020 the Nifty PSU Bank index has tanked 27 per cent, as compared to an 8 per cent fall in the benchmark index. A total of eight banks including Indian Bank, Canara Bank, Punjab National Bank, Syndicate Bank, Oriental Bank of Commerce, Union Bank of India, Jammu & Kashmir Bank and Allahabad Bank plunged between 30 per cent and 40 per cent during the period.

The fall comes amid weakening economic trends, which can lead to subdued credit growth and elevate stress formation in the immediate term.

Bank credit growth declined to 8.5 per cent in January from 13.5 per cent in the year-ago period led by a sharp slowdown in loans to the services sector, according to RBI data. Growth in advances to the services sector decelerated to 8.9 per cent from 23.9 per cent in January 2019.

“Bank credit growth has been falling, exhibiting a declining trend with PSU banks apparently not doing much of credit intermediation- to the extent of invoking FM admonition. Growth heavy lifting is largely done by select private banks. On the positive side, systemic asset quality trend seem to be improving with the Insolvency and Bankruptcy Code (IBC) process helping in recoveries,” analysts at HDFC Securities said in a note.

The credit growth will likely see an uptick aided by a low base, policy pushes, and better macros. The private banks will continue to gain market share, it added.

According to Business Standard report, in a meeting between the chiefs of PSBs and the Reserve Bank of India (RBI) officials, the RBI highlighted the muted credit growth in the economy and asked them to take steps to increase credit growth. CLICK HERE TO READ FULL REPORT

COMPANY	LATEST	ONE-MONTH BEFORE	LOSS(%)
ALLAHABAD BANK	12.05	16.65	-27.6
BANK OF INDIA	48.10	65.55	-26.6
INDIAN BANK	71.25	96.10	-25.9
CANARA BANK	138.30	185.70	-25.5
UNION BANK (I)	36.10	48.00	-24.8
PUNJAB NATL.BANK	44.00	56.80	-22.5
SYNDICATE BANK	19.00	23.75	-20.0
PUN. & SIND BANK	14.75	18.25	-19.2
ANDHRA BANK	13.00	16.00	-18.8
UCO BANK	12.30	14.90	-17.5
BANK OF BARODA	72.55	87.10	-16.7
ORIENTAL BANK	40.20	47.90	-16.1
CORPORATION BANK	18.75	22.30	-15.9
UNITED BANK (I)	7.15	8.50	-15.9
CENTRAL BANK	14.90	17.70	-15.8
BANK OF MAHA	10.45	12.35	-15.4
I O B	8.55	10.05	-14.9
ST BK OF INDIA	283.00	306.25	-7.6