Shares of Union Bank, Indian Bank, and BoI jump up to 5%: here's why

Public sector banks (PSBs) Union Bank of India, Indian Bank, Canara Bank and Bank of India’s shares shot up by 4.64 per cent, 4.47 per cent, 4.37 per cent and 2.32 per cent, respectively on the BSE in Wednesday’s intraday deals. 

Other PSB stocks like Punjab and Sind Bank, Bank of Baroda, Indian Overseas Bank and UCO Bank moved up in the range of 1-2 per cent each intraday. 

On an index level, Nifty PSU Bank was the top sectoral performer of the day on NSE jumping 2 per cent at 7,207 levels in intraday trade.

The recent uptick in the stock prices of state owned lenders is coming after a stellar quarterly performance in their quarter four earnings of the fiscal year 2023-24 (Q4FY24).

According to a PTI report, public sector banks (PSBs) collectively posted a profit of Rs 1.4 trillion in the financial year ending March 2024, up 35 per cent year on year (Y-o-Y). The 12 public sector banks cumulatively reported a profit of Rs 1.04 trillion in FY23.

Delhi-based Punjab National Bank net profit grew highest, soaring by 228 per cent to Rs 8,245 crore. Following closely behind, Union Bank of India that recorded a 62 per cent rise to Rs 13,649 crore, while Central Bank of India saw a 61 per cent increase to Rs 2,549 crore.

Several other PSBs also witnessed significant jumps in net profit, with Bank of India experiencing a 57 per cent growth to Rs 6,318 crore, Bank of Maharashtra with a 56 per cent rise to Rs 4,055 crore, and Chennai-based Indian Bank marking a 53 per cent improvement to Rs 8,063 crore. Notably, Bank of Baroda reported a net profit of Rs 17,788 crore, and Canara Bank recorded Rs 14,554 crore, both surpassing the Rs 10,000 crore mark.

This turnaround story for PSBs is notable, considering their journey from recording record losses of Rs 85,390 crore in FY18 to achieving record profits in FY24. The story reflects improved efficiency, enhanced asset quality, and strategic reforms implemented by these banks over the years.