Shares of state-run lenders such as Punjab National Bank, Bank of
Baroda, Canara Bank and Bank of India came under selling pressure after
India's second largest public sector bank, Punjab National Bank
reported disappointing set of fourth quarter numbers.
Punjab National Bank on Friday reported a huge jump in bad loans, which hurt the state-run lender's profitability, and sent its shares down by as much as 6.3 per cent.
In the March quarter, Punjab National Bank reported a net profit of Rs 307 crore, down 62 per cent year-on-year, and well below Rs 849 crore estimated by analysts polled by NDTV. The reason for the sharp fall in profitability was a 79 per cent year-on-year rise in provision for bad loans.
PNB's gross non-performing assets, as a percentage of advances, rose to 6.55 per cent as against 5.97 per cent in the December quarter; net NPA, which is gross NPA minus provisions, rose to 4.06 per cent versus 3.82 per cent sequentially.
Sentiment on the Street towards the PSU banks turned negative after the PNB earnings came out, due to which traders resorted to selling expecting similar set of asset worries for other PSU banks.
Avinnash Gorakssakar, founder director of Moneyinvestments.in, said, "One should focus on private sector banks rather than PSU banks as asset quality concerns have resurfaced for the PSU banks and private sector banks are better positioned on the asset quality front."
The CNX PSU bank index, a sub-index for the PSU banks was down 0.3 per cent compared to gain of 1.7 per cent on the Nifty.
Punjab National Bank on Friday reported a huge jump in bad loans, which hurt the state-run lender's profitability, and sent its shares down by as much as 6.3 per cent.
In the March quarter, Punjab National Bank reported a net profit of Rs 307 crore, down 62 per cent year-on-year, and well below Rs 849 crore estimated by analysts polled by NDTV. The reason for the sharp fall in profitability was a 79 per cent year-on-year rise in provision for bad loans.
PNB's gross non-performing assets, as a percentage of advances, rose to 6.55 per cent as against 5.97 per cent in the December quarter; net NPA, which is gross NPA minus provisions, rose to 4.06 per cent versus 3.82 per cent sequentially.
Sentiment on the Street towards the PSU banks turned negative after the PNB earnings came out, due to which traders resorted to selling expecting similar set of asset worries for other PSU banks.
Avinnash Gorakssakar, founder director of Moneyinvestments.in, said, "One should focus on private sector banks rather than PSU banks as asset quality concerns have resurfaced for the PSU banks and private sector banks are better positioned on the asset quality front."
The CNX PSU bank index, a sub-index for the PSU banks was down 0.3 per cent compared to gain of 1.7 per cent on the Nifty.
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