 "PSU banks dip on profit booking")
Shares of public sector undertaking (PSU) banks were trading lower, erasing their early morning gains on profit booking.
State Bank of India, Bank of Baroda, Allahabad Bank, IDBI Bank, Oriental Bank of Commerce and Bank of India were down 1%-25 on the National Stock Exchange (NSE).
At 02:12 PM, Nifty PSU Bank index was down 1.3% as compared to 0.33% fall in the Nifty 50 index.
In past four trading sessions PSU banks had outperformed the market with Nifty PSU bank index up 7% as compared to 1% rise in Nifty Bank index and 0.20% decline in the benchmark index.
State Bank of India (SBI), Indian Bank, Oriental Bank of Commerce, Uco Bank, Punjab National Bank, Punjab & Sindh Bank, Allahabad Bank, Andhra Bank, Union Bank of India, Bank of India, Bank of Baroda, Syndicate Bank and Corporation Bank were up between 5%-11% during the week.
Moody's Investors Service on Friday said that the government will have to infuse Rs 1.2 lakh crore into PSU banks by 2020 to bolster their balance sheets and make good the losses suffered by them. This is way higher than an additional Rs 45,000 crore capital infusion plan envisaged by the government.
Moody's said the asset quality of the banks will remain under pressure over the next 12 months and increased provisioning would constrain profitability and limit internal capital generation.
The capital levels of PSU banks improved recently on the back of new Reserve Bank of India (RBI) rules that have broadened the banks' capital base. The rules, amended in March 2016, allow the banks to recognize revaluation reserves, deferred tax assets and foreign currency reserves as common equity tier 1 (CET1) capital, in turn resulting in a one-off boost to capital levels, Moody's said in a note.
At 02:12 PM, Nifty PSU Bank index was down 1.3% as compared to 0.33% fall in the Nifty 50 index.
In past four trading sessions PSU banks had outperformed the market with Nifty PSU bank index up 7% as compared to 1% rise in Nifty Bank index and 0.20% decline in the benchmark index.
State Bank of India (SBI), Indian Bank, Oriental Bank of Commerce, Uco Bank, Punjab National Bank, Punjab & Sindh Bank, Allahabad Bank, Andhra Bank, Union Bank of India, Bank of India, Bank of Baroda, Syndicate Bank and Corporation Bank were up between 5%-11% during the week.
Moody's Investors Service on Friday said that the government will have to infuse Rs 1.2 lakh crore into PSU banks by 2020 to bolster their balance sheets and make good the losses suffered by them. This is way higher than an additional Rs 45,000 crore capital infusion plan envisaged by the government.
Moody's said the asset quality of the banks will remain under pressure over the next 12 months and increased provisioning would constrain profitability and limit internal capital generation.
The capital levels of PSU banks improved recently on the back of new Reserve Bank of India (RBI) rules that have broadened the banks' capital base. The rules, amended in March 2016, allow the banks to recognize revaluation reserves, deferred tax assets and foreign currency reserves as common equity tier 1 (CET1) capital, in turn resulting in a one-off boost to capital levels, Moody's said in a note.
Moody's scenario analysis also assumes a gradual pick-up in credit growth from 10% in FY2017 to 15% in FY2019, driven by both retail segment and an uptick in corporate loan demand, added note.