Nifty PSU Bank soars 26% in a month; BOI, Canara Bank, UBI rally 55%- QHN

Shares of state-owned banks have been on a roll in recent trading sessions. The Nifty PSU Bank index hit a new high in intra-day trades today, surging 26 per cent in the past one month after banks reported strong earnings for July-September quarter (Q2FY23). In comparison, the Nifty 50 has gained 5.4 per cent.

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Bank of India (BOI), Union Bank of India (UBI), Canara Bank, Bank of Maharashtra, Indian Bank and Uco Bank have rallied between 30 per cent and 55 per cent in the past one month. State Bank of India (SBI), Central Bank of India, Bank of Baroda, Punjab National Bank, Indian Overseas Bank and Punjab & Sindh Bank from the index have surged in the range of 16 per cent to 25 per cent. Most of these stocks were trading at their 52-week highs on the NSE.

On Wednesday, the Nifty PSU Bank index hit a new high of 3,811.15 in intra-day trade. The index has soared 67 per cent from its 52-week low of 2,283.85, touched on June 20, 2022.

Meanwhile among individual stocks, Bank of Baroda and Indian Bank more-than-doubled from their respective 52-week lows. While, UBI, BOI and Canara Bank appreciated between 80 and 90 per cent from their 52-week lows.

WATCH VIDEO: Is the tide turning for PSU banks?

In the first half of the current financial year 2022-23 (FY23), the cumulative net profit of all public sector banks (PSBs) increased by 32 per cent to Rs 40,991 crore.

Finance Minister Nirmala Sitharaman on Monday said the government’s efforts to reduce bad loans were yielding result with 12 public sector banks reporting a 50 per cent jump in combined net profit at Rs 25,685 crore in the second quarter ended September.

“The continuous efforts of the government for reducing the NPAs and further strengthening the health of PSBs are now showing tangible results. All 12 PSBs declared net profit of Rs 25,685 crore in Q2FY23 & total Rs 40,991 crore in H1FY23, up by 50 per cent & 31.6 per cent, respectively (y-o-y),”Sitharaman said in a tweet. CLICK HERE FOR FULL REPORT

Meanwhile analysts at Emkay Global Financial Services believe India’s banking sector credit growth is resurrecting from decadal lows, on the back of strong consumer retail demand; and is now further getting diversified, with VF, MFI, Cards and corporate growth too picking up pace.

The rate hike is likely to have some impact on the post-festive demand, but unlikely to completely derail the growth. Moreover, asset quality is on the mend, and the risk of a fresh NPA cycle remains low, leading to lower LLP and thus supporting strong profitability/return ratios for banks, the brokerage firm said in banking sector update.