Among the sectoral indices, the banking sector registered a positive momentum after the largest lender, State Bank of India (SBI), on Friday surprised the Street by reporting a 25.13% on-year jump in its net profit for the September quarter.
The stock of SBI rallied 3.86% and ended at Rs 243.25 on the BSE. It has reported a 7.4% on-year increase in its net interest income (NII). The asset quality improved, compared with a number of other state-owned lenders, who continue to show an increase in stressed assets. Gross non-performing assets (NPAs) were at 4.15% at the end of the September quarter, compared with 4.29% in Q1FY16 and 4.89% in the year-ago period.
“SBI’s 25% profit after tax (PAT) growth came as a positive surprise to the markets. Provisions coverage ratio of the bank has moved above 70% for the first time. However, loan growth remained subdued at 4%,” said Ravi Shenoy, AVP-midcaps research, Motilal Oswal Securities.
A total of 3.4 crore shares changed hands across the exchanges on Friday, against the three-month average of 1.64 crore. The scrip helped the BSE sectoral index for banking shares close 0.67% higher as majority of banking stocks closed in the green.
Bank of Baroda was the biggest gainer in the banking space as its shares closed up 4.95%. Bank of Baroda also announced its quarterly earnings on Friday.
During Q2FY16, the net profit of Bank of Baroda fell 88.73% on year due to higher provisions and contingencies and lower net interest income (NII). Shares of Bank of Baroda came under intense selling pressure when it announced the results. The scrips lost nearly 12% intraday, but managed to recover during later hours of trading and closed at Rs 167.40 on the BSE.
Shares of Punjab National Bank, another public sector bank which announced its results on Friday, closed 2.47% higher.
Although earnings of the bank missed the Street expectations, investors cheered the improvement in its bad loans quarter on quarter. Private lenders ICICI Bank and YES Bank were the only Bankex constituents to close in the red on Friday. Shares of ICICI Bank declined 1%, while those of YES Bank closed 0.38% lower.
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