PSU banks under pressure; Bank of India down 12% post Q4 results

Oriental Bank, SBI, Andhra Bank, Syndicate Bank, Union Bank and Allahabad Bank were down 3%-5%

Shares of public sector undertaking (PSU) banks were under pressure, falling by up to 12% on the National Stock Exchange (NSE) in intra-day trade on profit bookings.

Bank of India, Oriental Bank of Commerce, State Bank of India (SBI), Andhra Bank, Syndicate Bank, Union Bank of India and Allahabad Bank were down between 3% and 12% on the National Stock Exchange (NSE).

At 3:13 pm; the Nifty PSU Bank index, the largest loser among sectoral indices, was down 4.3%, as compared to 0.08% rise in the Nifty 50 and a 0.13% decline in the Nifty Private Bank index.

So far in 2017, the Nifty PSU Bank index had outperformed the market by surging 26% against 15% rise in the benchmark index Nifty 50 till Friday. Nifty Private Bank index was up 24.5% during the same period.

Bank of India, the largest loser among PSU bank pack, was tanked 13% to Rs 156 after the bank reported a net loss of Rs 1,045 crore in March 2017 (Q4FY17) quarter, a higher than an average analyst estimate of Rs 62 crore. Since January, the stock had zoomed 66% till Friday.

Gross non-performing assets (NPAs), as percentage of total loans, were at 13.22% in Q4FYY17, as against 13.38% in Q3FY17 and 13.07% in Q4FY16. Net NPAs came in marginally lower at 6.90% in the quarter compared to 7.09% in the preceding three months, but significantly lower than the March 2016 quarter’s 7.79%.

SBI was down 4% to Rs 293, after the stock hit an over two-year high of Rs 315 on Friday in intra-day trade post its Q4FY17 results.

Led by healthy growth in net interest income (NII), SBI posted 123% growth in standalone net profit at Rs 2,815 crore for the quarter-ended March 31. In the same quarter (Q4) of 2015-16, it was Rs 1,264 crore.

SBI’s consolidated net profit nosedived to Rs 241 crore in FY17 from Rs 12,225 crore in FY16, as clean-up exercise in bank’s associated banks accentuated in Q4FY17. Such performance was largely driven by alignment of non-performing loans (NPL) recognition and provisioning policies with the parent SBI that led to huge slippages and credit cost within these banks, analyst at IIFL Wealth Management said in result update.

Analysts at HDFC Securities maintain ‘buy’ rating on the stock with a SOTP of Rs 348.

“We continue to like SBI for its superior PCR, healthy CRAR (even after the merger, Tier I at 10%), strong liability franchise and relatively lower stressed assets. Disinvestments from non-core investments, unlocking value in subsidiaries and additional provisions (standard assets and counter cyclical) provide a cushion to earnings. Massive clean-up in its associate banks provides additional comfort,” the brokerage firm said in results review.

Bank	30/12/2016	19/05/2017	% chg	LTP	% chg
Bank of India	107.25	178.30	66.25	158.35	-11.19
Allahabad Bank	60.20	82.60	37.21	78.50	-4.96
Syndicate Bank	61.55	84.70	37.61	80.70	-4.72
Andhra Bank	47.45	65.00	36.99	62.05	-4.54
St Bk of India	250.20	308.00	23.10	294.15	-4.50
Union Bank (I)	123.10	174.60	41.84	167.55	-4.04
IDBI Bank	69.40	68.75	-0.94	66.20	-3.71
Oriental Bank	106.00	157.70	48.77	152.55	-3.27
Bank of Baroda	153.40	188.75	23.04	182.60	-3.26
Punjab Natl.Bank	115.45	155.20	34.43	151.10	-2.64
IOB	24.25	27.60	13.81	26.90	-2.54
Canara Bank	255.71	367.60	43.76	361.65	-1.62
LTP : Last traded price on NSE in Rs at 03:15 pm