PSU banks under pressure; Bank of India, Canara Bank hit 52-week low

Shares of public sector undertaking (PSU) banks are under pressure with four state-owned banks – Allahabad Bank, Bank of India, Canara Bank and Corporation Bank have touched their respective 52-week lows on the Bombay Stock Exchange (BSE).

IDBI Bank, Union Bank of India, Allahabad Bank and Bank of India have dipped more than 2% each, while Bank of Baroda, Punjab National Bank, Canara Bank and Oriental Bank of Commerce are down between 1-2% as compared to 0.49% decline in S&P BSE Sensex.

Bank of India (BoI) has dipped 2% at Rs 119, also its 52-week low on the BSE. Post July-September (Q2) quarter results, the stock slipped 11% from Rs 133 on November 9 after reported a bleak Q2 with a net loss of Rs 1,100 crore, its second loss in the past three quarters.

Religare Institutional Research expects BOI’s profitability to remain weak and return on equities (ROEs) subdued due to poor loan growth and higher credit costs.

State Bank of India (SBI), the country’s largest lender, was down 1% at Rs 237 on the BSE.

According to analysts at Prabhudas Lilladher, SBI’s management suggested that margins have not yet bottomed out and the recent 40bp cut in base rate will further impact lending yields.

On liability side, despite aggressively cutting deposit rates the bank is still seeing the similar quantum of deposit inflow and deposit repricing will pick?up materially from April?2016 onwards.

The bank is hopeful of significantly cleaning up the balance sheet over next 12?18 months while the write?back from written off accounts (around Rs 40,000 crore) may aid profitability in the medium term, analysts said in a report dated December 7, 2015.

At 02:24 PM, Nifty PSU Bank index was down 1.1% as compared to 0.37% fall in the Nifty 50.


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