Shares of public sector undertaking (PSU) banks have moved by up to 6% on the National Stock Exchange (NSE) after Vijay Bank said its assets quality improved in June 2018 (Q1FY19) quarter.
State Bank of India (SBI), Bank of Baroda, Vijaya Bank, Bank of India, Canara Bank, Union Bank of India, Oriental Bank of Commerce, Punjab National Bank (PNB), Indian Bank, Syndicate Bank and Allahabad Bank were up more than 1% on the NSE.
At 01:53 pm; Nifty PSU Bank index was up 1.7% at 2,849 points, gaining 2.1% from its intra-day low of 2,788. On comparison, the Nifty 50 index was up 0.33% at 11,046 points.
Vijaya Bank’s gross non-performing assets (NPAs) during the quarter under review fell to 6.19% of the gross advances from a level of 7.3% a year ago. Net NPAs or bad loans were trimmed to 4.10% as a percentage of net loans from 5.24% earlier. As on March 31, 2018, the bank’s gross NPAs and Net NPAs stood at 6.34% and 4.32%, respectively.
Vijaya Bank reported 43.3% decline in net profit at Rs 1.44 billion for Q1FY19, as compared to Rs 2.55 billion in the corresponding quarter of previous fiscal. Net interest income (interest earned minus interest expended) grew 27.8% at Rs 12.07 billion from Rs 9.44 billion in previous year quarter.
“After a muted FY18, PSU banks are expected to gradually pick-up on growth. We expect all PSU banks to return to profitability with the exception of PNB, though return ratios should remain subdued. While the pressure on cost of funds may result in flattish NIM, some PSU banks may report higher NIMs due to moderation in interest reversals. Further hardening of bond yields may result in higher MTM losses,” Motilal Oswal Securities said in result preview.