On the asset quality side, signs of recovery are visible with recovery and upgradations, backed by a strong 56% qoq improvement in cash recovery (Rs 35.37 billion) resulting in both gross and net NPAs improving sequentially to 11.05% and 6.91% respectively. As on March quarter, gross and net NPAs stood at 11.84% and 7.48%, respectively.
According to analysts at Antique Stock Broking, two large resolutions under the IBC boosted the quarterly performance as it led to far better-than-expected NII, higher recovery of Rs 5 billion from written-off loans and better recovery in NPLs.
Going forward, the brokerage firm expect resolution and development under SAMADHAN (power sector resolution if materializes) to help; however, low coverage ratio on stressed loans ex-IBC (22%), weak core PPP (1.2-1.3%) and low capital cushion (CET 1 of 9.3%) are likely to keep the performance volatile.
Post Q1 results, shares of Canara Bank have rallied 6% to Rs 273 on the National Stock Exchange (NSE). State Bank of India (SBI), Bank of Baroda (BoB), Indian Bank and Bank of India too have rallied more than 4%, while Syndicate Bank, Union Bank of India, Allahabad Bank and Punjab National Bank (PNB) were up in the range of 2% to 4% on the NSE.
At 11:05 am; Nifty PSU Bank index, the largest gainer among sectoral indices, was up 4.2% at 3,059, as compared to 0.41% rise in the Nifty 50 index. Nifty Bank and Nifty Private Bank indices were up 1% each.