 "Nifty PSU Bank index hits three-month high")
Shares of public sector undertaking (PSU) banks were trading higher for third straight trading session with the Nifty PSU Bank index hitting three-month high.
As per a media report on Thursday, the Reserve Bank of India (RBI) trimmed the list of debt-laden companies for loan provisioning in the fourth quarter ended March 31, 2016. Lower provisioning would help reduce credit cost burden thereby easing pressure on profitability.
Banks were individually informed that they do not have to provide for outstanding loans to 20 firms in January-March (Q4FY16) quarter, including Jaiprakash Associates and Coastal Energen, out of the 150 corporates that the RBI had listed in December. Steps taken by these companies to reduce debt have prodded the central bank to make this move.
State Bank of India (SBI), Canara Bank, Oriental Bank of Commerce, Union Bank of India and Bank of Baroda were up 2%-3%, while Bank of India, Punjab National Bank, Syndicate Bank, Allahabad Bank and IDBI Bank up 1%-2% on the National Stock Exchange (NSE).
At 12:25 pm, Nifty PSU Bank index, the largest gainer among sectoral indices, was up 2.3% at 2,559 as compared to a marginal 0.1% rise in the benchmark Nifty 50 index. The PSU bank index hit an intra-day high of 2,567, its highest level since January 14, 2016.
Apart from excluding some of the stressed corporates, the RBI has not added any new names and in fact listed some borrowers who can be upgraded to the standard asset category.
The brokerage house Religare Institutional Research believe this could ease the pressure on banks that had spread the impact of the RBI’s asset quality review (AQR) over two quarters and recognised only 50-70% of the non-performing assets (NPAs) in Q3.
Banks are expected report high treasury gains in Q4 since G-sec yields have declined by around 30 basis points quarter on quarter and if slippages turn out to be lower than anticipated, earnings could surprise positively as compared to our and consensus estimates, added report.
As per a media report on Thursday, the Reserve Bank of India (RBI) trimmed the list of debt-laden companies for loan provisioning in the fourth quarter ended March 31, 2016. Lower provisioning would help reduce credit cost burden thereby easing pressure on profitability.
Banks were individually informed that they do not have to provide for outstanding loans to 20 firms in January-March (Q4FY16) quarter, including Jaiprakash Associates and Coastal Energen, out of the 150 corporates that the RBI had listed in December. Steps taken by these companies to reduce debt have prodded the central bank to make this move.
State Bank of India (SBI), Canara Bank, Oriental Bank of Commerce, Union Bank of India and Bank of Baroda were up 2%-3%, while Bank of India, Punjab National Bank, Syndicate Bank, Allahabad Bank and IDBI Bank up 1%-2% on the National Stock Exchange (NSE).
At 12:25 pm, Nifty PSU Bank index, the largest gainer among sectoral indices, was up 2.3% at 2,559 as compared to a marginal 0.1% rise in the benchmark Nifty 50 index. The PSU bank index hit an intra-day high of 2,567, its highest level since January 14, 2016.
Apart from excluding some of the stressed corporates, the RBI has not added any new names and in fact listed some borrowers who can be upgraded to the standard asset category.
The brokerage house Religare Institutional Research believe this could ease the pressure on banks that had spread the impact of the RBI’s asset quality review (AQR) over two quarters and recognised only 50-70% of the non-performing assets (NPAs) in Q3.
Banks are expected report high treasury gains in Q4 since G-sec yields have declined by around 30 basis points quarter on quarter and if slippages turn out to be lower than anticipated, earnings could surprise positively as compared to our and consensus estimates, added report.
| Name | LTP (Rs) | % chg* | %chg# |
| Bank of Baroda | 162.15 | 2.79 | 48.3 |
| SBI | 198.90 | 2.34 | 34.2 |
| Canara Bank | 210.70 | 2.33 | 35.1 |
| Syndicate Bank | 71.65 | 2.07 | 45.0 |
| Union Bank | 134.10 | 1.75 | 28.9 |
| PNB | 89.90 | 1.47 | 29.8 |
| Bank of India | 98.05 | 0.98 | 22.4 |
| Central Bank | 80.40 | 0.82 | 67.8 |
| IDBI Bank | 72.75 | 0.55 | 54.0 |
| IOB | 31.85 | 0.47 | 52.8 |
| LTP: Last traded price on NSE at 12:33 pm | |||
| *Change over previous close | |||
| #Change over 52-week low | |||
