Small M-Cap Banking Stocks Soar 12% On Better Earnings

New Delhi, January 20: | Updated: Jan 21 2003, 05:30am hrs
Robust quarterly financial results by many second-rung banking stocks have seen these stocks soar to their new highs. Even as major banks took a backseat, their smaller counterparts, in terms of market capitalisation, surged up to 12 per cent on Monday alone. As an indication, seven of them climbed to their new 52-week highs during the day.

Corporation Bank, Union Bank of India (UBI), Andhra Bank, Punjab National Bank (PNB) and Oriental Bank were amongst the top gainers rising 4-12 per cent on January 20.

The day was marked by brilliant financial results declared by Corporation Bank, Canara Bank, Federal Bank and Dhanalakshmi Bank, with their net profits jumping 36 to 82 per cent during the quarter ended December 2002.

Sources at an online broking firm said, The banks have been able to sustain a sharp growth in income from treasury operations thanks to the declining interest rates. He added banking stocks are trading at low price earning multiples. This, coupled with a handsome growth in net profits, makes them attractive investment options.

On Monday, stocks of Indian Overseas Bank, Vijaya Bank, Andhra Bank, PNB, UBI, Allahabad Bank and Canara Bank touched their new yearly highs on the day. Corporation Bank was the top gainer on the bourses as the scrip zoomed up 11.8 per cent on Monday alone to close at Rs 147.75 on The Stock Exchange, Mumbai (BSE).

The bank has seen a 66 per cent growth in net profit which touched Rs 151.81 crore for the quarter ended December, 2002 as against Rs 91.45 crore during the same period in the previous fiscal. The robust growth in profits was fuelled by a 138 per cent jump in income from sale of investments. The total income of the bank rose by 15 per cent during the period.

Canara Bank spurted 5.66 per cent during the day to close at Rs 58.8, after touching a 52-week high of Rs 59.35.

The bank reported a net profit of Rs 292 crore, which was 82.59 per cent higher than the figure in the same period in the previous year. Its treasury income also zoomed 40 per cent during the period.

Union Bank rose to its new 52-week high of Rs 26.15 before closing with 10.47 per cent gains at Rs 25.85 on Monday.