PSU banks under pressure post Bank of Baroda Q3 results; CNX PSU Bank index tanks 6%

BOB, SBI, PNB, Canara Bank, Andhra Bank, Oriental Bank, Union Bank, BOI and IOB were down 4-14% on NSE.

Shares of public sector undertakings (PSU) in the banking sector are under pressure with the National Stock Exchange (NSE) CNX PSU Bank index declining 6% after the Bank of Baroda reported a weak set of numbers for the third quarter ended December 31, 2014 (Q3).

Bank of Baroda, State Bank of India, Punjab National Bank, Canara Bank, Andhra Bank, Oriental Bank of Commerce, Union Bank of India, Bank of India, Syndicate Bank, Indian Overseas Bank and Allahabad Bank were trading down 4-14% on NSE.

At 1135 hours, CNX PSU Bank index was down 6% or 240 points at 4,059 compared to 1.2% decline in benchmark CNX Nifty.

Shares of Bank of Baroda plunged 14% to Rs 186 after reporting a sharp 68% year on year (yoy) drop in net profit at Rs 334 crore for the third quarter ended December 31, 2014 (Q3), due to higher provisions for stressed loans and tax provisions.
The government-owned bank had profit of Rs 1,048 crore in a year ago quarter.

Net interest income (interest earned minus interest expended) however grew 7.5% at Rs 3,286 crore on yoy basis.

Analysts on an average had expected profit of Rs 1,329 crore on net interest income of Rs 3,626 crore for the quarter.

The provisions for bad loans increased by 66% at Rs 1,262 crore against Rs 762 crore in previous year quarter, Bank of Baroda said in a statement.

The bank’s net non performing assets (NPA) as a percentage of net advances were at 2.21% in December quarter, from 1.74% in September quarter.