Banking shares, mainly public sector undertaking (PSUs), are trading higher in otherwise subdued market after the State Bank of India (SBI) reported a better-than-expected net profit for the quarter ended September 30, 2015 (Q2FY16).
SBI, Bank of Baroda, Oriental Bank of Commerce and Punjab National Bank are trading higher by up to 5%, while Andhra Bank, Canara Bank, Union Bank of India, Bank of India and Indian Overseas Bank up 1%-2% on the National Stock Exchange (NSE).
At 02:42 PM, CNX PSU Bank index was up 3% as compared to 0.65% rise in Bank Nifty and 0.18% gain in the benchmark CNX Nifty.
Country's largest lender SBI has reported 25% year on year (YoY) jump in standalone net profit at RS 3,879 crore in Q2FY16 against an average analyst estimate of Rs 3,582 crore. Net interest income (interest earned minus interest expended) grew 7.4% at Rs 14,252 crore on YoY basis.
The bank’s assets quality also improved during the quarter. Gross non-performing assets (NPA) as a percentage of gross advances declined to 4.15% in September quarter compared 4.29% in June quarter and 4.89% in year-ago period. Net NPA also fell to 2.14% during the quarter from 2.24% in preceding quarter and 2.73% in previous year quarter.
Punjab National Bank has also seen its asset quality improvement on sequentially basis. The bank’s gross NPA declined to 6.36% in September quarter from 6.47% in June quarter and net NPA was down to 3.99% from 4.05% in preceding quarter.
Bank of Baroda, the largest gainer among PSU banking pack, was up 5% to Rs 166, bouncing back 19% from intra-day low on expectation of the new management is reorganising the lending book and next quarter will be better.
The stock tanked 12% to Rs 140 after the bank reported a sharp 89% YoY fall in net profit at Rs 124 crore in Q2, owing to high provisions as the private lender's NPAs worsened.
Asset quality declined sharply with the gross NPA increased rising sequentially to 5.56% in Q2FY16 from 4.13% in Q1FY16, whereas Net NPA at 3.08% in the September quarter as compared to 2.07% in previous quarter.
A combined 36.69 million shares already changed hands on the counter against an average sub three million shares that were traded daily in past two weeks on the NSE and BSE.