PNB, OBC slide; United Bank rises after merger announcement

The merged entity will be 2nd largest PSU bank in India

Meanwhile, the S&P BSE Sensex was down 324.97 points or 0.87% to 37,007.82.

In a press briefing after market hours on Friday, 30 August 2019, Finance Minister Nirmala Sitharaman announced that Punjab National Bank (PNB), Oriental Bank of Commerce (OBC) and United Bank of India will be merged. The combined entity will be second largest PSU bank in India with business of Rs 17.94 lakh crore. It will have second largest banking network in India with 11,437 branches.

The scale and synergy will benefit through high CASA and lending capacity combined in consolidated bank. The merger will result in large cost reduction potential due to network overlaps. Cost saving and income opportunities will arise for JVs and subsidiaries.

All three banks share a common CBS (core banking software), Finacle, which will enable quick realisation of gains.

The finance minister also announced the upfront capital infusions of Rs 55250 crore into 10 public sector banks. PNB is being allocated Rs 16000 crore.

Shares of PNB fell 7.08% to Rs 60.35 at 10:08 IST on BSE. The stock hit a high of Rs 62.4 and a low of Rs 60.95 so far during the day. The stock hit a 52-week high of Rs 99.9 on 01 Apr 2019. The stock hit a 52-week low of Rs 58.65 on 01 Oct 2018.

On the BSE, 14.53 lakh shares were traded in the counter so far compared with average daily volumes of 12.38 lakh shares in the past two weeks. PNB underperformed the market in past one year, sliding 23.63% as against Sensex's 3.51% fall.

PNB reported net profit of Rs 1018.63 crore in Q1 June 2019 compared with net loss of Rs 940.01 crore in Q1 June 2018. Total income rose 0.59% to Rs 15161.74 crore in Q1 June 2018.

In a separate announcement on Monday, 2 September 2019, PNB said that its board in its meeting on 5 September 2019 shall consider capital infusion upto Rs 18,000 crore

Shares of Oriental Bank of Commerce (OBC) declined 4.35% to Rs 70.30 at 10:08 IST on BSE. The stock hit a high of Rs 72.8 and a low of Rs 68.1 so far during the day. The stock hit a 52-week high of Rs 119 on 01 Apr 2019. The stock hit a 52-week low of Rs 58.1 on 09 Oct 2018.

On the BSE, 98,000 shares were traded in the counter so far compared with average daily volumes of 1.09 lakh shares in the past two weeks. OBC has underperformed the market in past one year, sliding 13.43% as against Sensex's 3.51% fall.

OBC reported net profit of Rs 112.68 crore in Q1 June 2019 as against net loss of Rs 393.21 crore in Q1 June 2018. Total income rose 19.1% to Rs 5,634.98 crore in Q1 June 2019 over Q1 June 2018.

Shares of United Bank of India rose 4.03% to Rs 10.84 at 10:08 IST on BSE. The stock hit a 52-week high of Rs 13.25 on 01 Jan 2019. The stock hit a high of Rs 11.99 and a low of Rs 10.67 so far during the day.The stock hit a 52-week high of Rs 13.25 on 01 Jan 2019. The stock hit a 52-week low of Rs 9.05 on 08 Oct 2018.

On the BSE, 1.97 lakh shares were traded in the counter so far compared with average daily volumes of 37,000 shares in the past two weeks. United Bank of India underperformed the market in past one year, declining by 16.04% as against Sensex's 3.51% fall.

United Bank of India reported net profit of Rs 104.99 crore in Q1 June 2019 as against net loss of Rs 388.68 crore in Q1 June 2018. Total income rose 17.8% to Rs 3,003.13 crore in Q1 June 2019 over Q1 June 2018.

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