Share prices of public sector banks (PSBs) on Tuesday closed the session on a high note after a Bank of India (BoI) official said that the lender had recovered Rs 7,000 crore worth of standby letters of credit in the last two months. The Nifty PSU Bank index closed 2.33% higher at 2,910.85 points, while the S&P BSE Bankex index ended 0.43% up at 27,905.43 points. “Bank of India has recovered Rs 7,000 crore worth standby letters of credit in the last two months and the balance of Rs 2,000 crore would be recovered in another two months,” the bank’s executive director N Damodharan told news agency PTI. PSU bank stocks on Tuesday gained up to 11.54%. The rally was led by Andhra Bank, which closed 11.54% higher at Rs 40.1. Interestingly, Andhra Bank on Monday sank to a 15-year low of Rs 35.95 after the enforcement directorate on 9th March filed charges against Anup Garg, a former director of Andhra Bank, in connection with a fraud case involving Sterling Biotech. However, Goldman Sachs in a report argued that the recent decline in Indian bank shares was overdone and that asset quality was bottoming out and earnings visibility was improving, reported Bloomberg. The brokerage listed ICICI Bank and HDFC Bank as its top picks.
Shares of Union Bank of India, Bank of Baroda (BoB), Oriental Bank of Commerce and Syndicate Bank gained 6.97%, 6.62%, 6.38% and 5.98%, respectively. Other prominent gainers included Allahabad Bank, Canara Bank, IDBI Bank, Indian Bank, Punjab National Bank (PNB) and State Bank of India (SBI). “Less-concerned on earnings impact of Punjab National Bank fraud case and RBI’s bad-loan cleanup after meeting senior management at private banks, state-owned banks and non-banking finance NBFCs, as well as policymakers,” said Goldman Sachs.
Bank of India stock jumps 7.5%
Shares of Bank of India jumped 7.5% on Tuesday after the company recovered Rs 7,000 crore worth Standby Letters of Credit in the last two months and the balance of Rs 2,000 crore would be recovered in another two months. The stock soared 7.47% to end at Rs 102.20 on BSE. Intra-day, it zoomed 14.98% to Rs 109.35. At NSE, shares of the company surged 7.41% to close at Rs 102.15. The company’s market valuation rose by Rs 841.06 crore to Rs 12,106.06 crore. In terms of equity volume, 66.43 lakh shares of the company were traded on BSE and over 6 crore shares changed hands at NSE during the day. This recovery will substantially improve the bank’s balance sheet, Bank of India executive director N Damodharan said yesterday in Coimbatore. The bank is aiming to bring down its net NPA ratio substantially, to below six per cent, he said.