PSU banks rally on good performance from PNB, Union Bank

Punjab National Bank and Union Bank of India has surged 5% each at Rs 788 and Rs 251 respectively on NSE.

Shares of most of the public sector undertaking (PSU) banks are trading higher by up to 5%, recouping their early morning losses, after Punjab National Bank and Union Bank of India have seen their assets quality improvement on sequential basis.

Punjab National Bank and Union Bank of India has surged 5% each at Rs 788 and Rs 251 respectively on the National Stock Exchange (NSE).

State Bank of India, Bank of India, Andhra Bank, Bank of Baroda and Oriental Bank of Commerce are trading higher by 2-3%, while Allahabad Bank, Canara Bank, Indian Overseas Bank, Syndicate Bank and IDBI Bank are up 1-2%.

The NSE PSU banking shares index, CNX PSU index is up nearly 3% compared to 0.21% rise in benchmark Nifty at 1319 hours. Punjab National Bank has seen it assets quality improving on sequential basis, while maintaining topline growth rate.

The gross non-performing assets (NPA) of the bank have come down from 4.61% in December 2012 quarter to 4.27% in the recently concluded quarter.  In the same period, its Net NPAs were down to 2.35% from 2.56%. Net interest income (interest income minus interest expanded) increased by 14.2% to Rs 3,779 crore on year-on-year (yoy) basis.

Union Bank of India on the other hand, has seen its gross NPA declined to 2.98% from 3.36% and net NPA to 1.61% from 1.70% on sequential basis. The bank has reported a better-than-expected net profit at Rs 789 crore for the quarter ended March 31, 2013 on back of strong growth recorded by retail banking operations. Analyst on an average had expected profit of Rs 618 crore from the state-owned bank.