PSU bank shares rally on Bank of India’s Rs7,000 crore bad loan recovery
Mumbai: Shares of public sector banks surged on Tuesday, following a media report that Bank of India has recovered nearly Rs7,000 crore bad loans in the last two months.
Bank of India shares surged over 10% to Rs106 apiece, while the Nifty PSU Bank index rose 3.3% and India’s benchmark Sensex index was up 0.4% to 34,046.81 points.
Shares of other state-owned banks too rallied on optimism. Shares of Oriental Bank of India added 6.2%, Andhra Bank 6.1%, Union Bank of India 6%, Bank of Baroda 6%, Syndicate Bank 5.2%, Allahabad Bank 4.4%, Punjab National Bank 4.4%, Canara Bank 4.1%, Indian Bank 3.3%, IDBI Bank 2.8% and State Bank of India shares rose 2.3%.
Banking stocks have been under severe pressure after the Punjab National Bank scam was reported on 14 February. Since then, Nifty PSU Bank index has tanked 18%.
“Bank of India has recovered Rs7,000 crore worth Standby Letters of Credit in the last two months and the balance of Rs2,000 crore would be recovered in another two months,” PTI said, quoting a top official from Bank of India.
Bank of India executive director N. Damodharan said the recovery will substantially improve the bank’s balance sheet. He added that the bank is aiming to bring down its net non-performing assets (NPAs) ratio substantially, to below 6%.
In the December quarter, Bank of India reported a loss of Rs2,341.20 crore, while its gross NPA was at 16.93% for the quarter against 13.38% year-on-year.