PSU banks in demand, CNX PSU Bank index surge 4%

BOI, Allahabad Bank, BOB, Oriental Bank, Union Bank, Canara Bank and PNB are up 5-15% on NSE.

Shares of public sector undertaking (PSU) banks are in demand, trading higher by up to 15% after select banks have reported a better than expected earnings for the quarter ended September 2013 (Q2).

The National Stock Exchange (NSE) CNX PSU Bank index has surged 4.2% as compared to 0.23% rise in benchmark CNX Nifty and 0.72% gain in Bank Nifty at 1325 hours.

Bank of India was the largest gainer among the pack, up 15% at Rs 199 after reporting more than 100% year on year (yoy) growth in net profit at Rs 622 crore for the quarter ended September 2013 as bad loan falls. The state owned bank had posted profit of Rs 302 crore in year ago quarter.

Quality of assets of the bank during the quarter under review improved with the net NPA (non performing assets) ratio down to 1.85% from 2.04% a year ago. Net NPA stood at 2.1% at the end of June quarter.

Allahabad Bank was up 12% at Rs 90.95 after reported a better than expected net profit at Rs 276 crore in Q2 against an average analyst estimate of Rs 243 crore. The bank’s net NPA ratio declined to 3.83% from 3.87% in previous quarter.

Bank of Baroda too up 5% at Rs 612 after the bank’s Q2 net profit decline 10% yoy; lower than analysts' expectations, to Rs 1,168 crore, led by higher other income, lower tax expenses and provisions.

Oriental Bank of Commerce, Union Bank of India, Canara Bank, Punjab National Bank, Indian Overseas Bank, Andhra Bank and Syndicate Bank are among other PSU banks are up 4-6% on NSE.