 "A broker reacts while trading at his computer terminal at a stock brokerage firm in Mumbai (pic: Reuters)")
Shares of public sector undertaking (PSU) banks continued their northward journey with most stocks trading higher on the National Stock Exchange (NSE) in an otherwise subdued market on Thursday.
At 11:49 AM, the Nifty PSU Bank index was up 1.8% at 2,934, as compared to 0.01% fall in the Nifty 50 index. The PSU bank index is trading at its highest level since December 2015 on the NSE.
Allahabad Bank, Canara Bank, Bank of India, Union Bank of India and Punjab National Bank (PNB) were up more than 3% each, while State Bank of India (SBI), Bank of Baroda, Syndicate Bank, IDBI Bank, Oriental Bank of Commerce (OBC) and Andhra Bank were up 1%-3% on the NSE.
Since June 13, the PSU bank index surged 18% after the Reserve Bank of India (RBI) introduced "sustainable structuring of stressed assets" which allows banks to do deep restructuring of stressed projects without any management change. The benchmark index was up 5%, while Nifty Bank index gained 6% during the same period.
Since then, Allahabad Bank and PNB have rallied more than 50% each, while Indian Bank, Dena Bank, OBC, Vijaya Bank, Bank of India and United Bank of India surged between 30%-50%.
According to Nomura, PSU banks have been very conservative on non performing assets (NPA) recognition in 2HFY16 and they are nearing the end of the NPA recognition cycle.
“PSU banks have front ended a large part of stressed asset recognition and now unrecognised stress remains very low as compared with private corporate banks,” the brokerage firm said in a recent report.
“The government and the RBI have taken several positive measures, in tandem, like “Scheme for Sustainable Structuring of Stressed Assets” (S4A), Strategic Debt Restructuring (SDR), 5:25 refinance scheme, Bankruptcy Law etc. These steps will help in faster resolution of the banks’ bad loan problems,” Sharekhan said in a Q1 results preview of banking & NBFC.
Emboldened by these moves, banks too have significantly increased their loan recovery efforts, which should help to gradually reduce and eventually resolve the headline gross non-performing assets (GNPA) numbers in the long term, added report.
In Q1FY2017, while the GNPA levels may increase, the gross stress addition is likely to see improvement on a sequential basis before tapering off in the medium term, the report suggests.
At 11:49 AM, the Nifty PSU Bank index was up 1.8% at 2,934, as compared to 0.01% fall in the Nifty 50 index. The PSU bank index is trading at its highest level since December 2015 on the NSE.
Allahabad Bank, Canara Bank, Bank of India, Union Bank of India and Punjab National Bank (PNB) were up more than 3% each, while State Bank of India (SBI), Bank of Baroda, Syndicate Bank, IDBI Bank, Oriental Bank of Commerce (OBC) and Andhra Bank were up 1%-3% on the NSE.
Since June 13, the PSU bank index surged 18% after the Reserve Bank of India (RBI) introduced "sustainable structuring of stressed assets" which allows banks to do deep restructuring of stressed projects without any management change. The benchmark index was up 5%, while Nifty Bank index gained 6% during the same period.
Since then, Allahabad Bank and PNB have rallied more than 50% each, while Indian Bank, Dena Bank, OBC, Vijaya Bank, Bank of India and United Bank of India surged between 30%-50%.
According to Nomura, PSU banks have been very conservative on non performing assets (NPA) recognition in 2HFY16 and they are nearing the end of the NPA recognition cycle.
“PSU banks have front ended a large part of stressed asset recognition and now unrecognised stress remains very low as compared with private corporate banks,” the brokerage firm said in a recent report.
“The government and the RBI have taken several positive measures, in tandem, like “Scheme for Sustainable Structuring of Stressed Assets” (S4A), Strategic Debt Restructuring (SDR), 5:25 refinance scheme, Bankruptcy Law etc. These steps will help in faster resolution of the banks’ bad loan problems,” Sharekhan said in a Q1 results preview of banking & NBFC.
Emboldened by these moves, banks too have significantly increased their loan recovery efforts, which should help to gradually reduce and eventually resolve the headline gross non-performing assets (GNPA) numbers in the long term, added report.
In Q1FY2017, while the GNPA levels may increase, the gross stress addition is likely to see improvement on a sequential basis before tapering off in the medium term, the report suggests.
| Bank | 29/02/2016 | 13/06/2016 | LTP | % chg* | %chg# |
| PNB | 71.00 | 83.00 | 131.30 | 58.19 | 84.93 |
| Allahabad Bank | 43.35 | 52.05 | 81.95 | 57.44 | 89.04 |
| St Bk of Mysore | 368.75 | 452.90 | 682.15 | 50.62 | 84.99 |
| Indian Bank | 76.05 | 105.45 | 155.70 | 47.65 | 104.73 |
| Dena Bank | 26.00 | 29.40 | 41.65 | 41.67 | 60.19 |
| Oriental Bank | 76.45 | 89.25 | 125.70 | 40.84 | 64.42 |
| Vijaya Bank | 31.10 | 31.25 | 42.70 | 36.64 | 37.30 |
| St Bk of Bikaner | 470.15 | 499.05 | 679.00 | 36.06 | 44.42 |
| United Bank (I) | 17.95 | 18.10 | 24.50 | 35.36 | 36.49 |
| Bank of India | 83.30 | 87.30 | 116.20 | 33.10 | 39.50 |
| S B T | 366.50 | 392.20 | 511.85 | 30.51 | 39.66 |
| Canara Bank | 158.45 | 192.65 | 248.05 | 28.76 | 56.55 |
| Andhra Bank | 46.10 | 49.95 | 62.60 | 25.33 | 35.79 |
| UCO Bank | 31.70 | 36.20 | 45.25 | 25.00 | 42.74 |
| Corporation Bank | 32.00 | 35.20 | 43.80 | 24.43 | 36.88 |
| Syndicate Bank | 51.10 | 65.95 | 80.10 | 21.46 | 56.75 |
| Bank of Maha | 28.70 | 28.90 | 34.50 | 19.38 | 20.21 |
| Central Bank | 58.55 | 87.85 | 104.85 | 19.35 | 79.08 |
| Union Bank (I) | 106.95 | 118.55 | 139.05 | 17.29 | 30.01 |
| Pun. & Sind Bank | 32.15 | 44.35 | 50.95 | 14.88 | 58.48 |
| IDBI Bank | 58.55 | 66.45 | 76.05 | 14.45 | 29.89 |
| St Bk of India | 158.75 | 201.80 | 230.45 | 14.20 | 45.17 |
| Bank of Baroda | 131.90 | 146.10 | 163.45 | 11.88 | 23.92 |
| I O B | 24.25 | 25.80 | 28.10 | 8.91 | 15.88 |
| J & K Bank | 63.35 | 64.65 | 70.15 | 8.51 | 10.73 |
| Nifty PSU Bank | 2037.10 | 2478.75 | 2934.05 | 18.37 | 44.03 |
| Nifty 50 | 6987.05 | 8110.60 | 8518.65 | 5.03 | 21.92 |
| LTP : Last traded price on NSE in Rs at 11:49 AM | |||||
| * % change over June 13, 2016; # % change over February 29, 2016 | |||||
