After several disturbing news from the banking industry, here is something to feel a bit relived. Bank of India is reported to have recovered close to Rs 7000 crore bad loans in the last two months.
This report has triggered some hectic buying in the banking space, which saw some heavy selling ever since Punjab National Bank stated last month that it found a couple of the bank's officials issued fake letters of understanding to Nirav Modi group and Mehul Choksi's Gitanjali Gems. The size of the scam, originally estimated to be about Rs 11,300 crore, is now said to be somewhere around Rs 13,000 crore. Besides Punjab National Bank, several PSU banks and a few private sector banks have exposure to Gitanjali Gems and Nirav Modi.
On Monday, shares of Andhra Bank tumbled after the Enforcement Directorate filed a charge sheet against Anup Kumar Garg, a former director of the bank for his alleged involvement in a scam worth over Rs 5000 crore with regard to money lent by a consortium of bankers to Sterling Biotech Limited. With Andhra Bank, shares of almost all public sector banks felt the heat and suffered sharp losses on that session.
According to reports, Bank of India has recovered Rs 7000 crore worth Standby Letters of Credit in the last two months and the balance of Rs 2000 crore would be recovered in another two months. The recovery is expected to substantially improve the bank's balance sheet, said the bank's executive director N. Damodaran. The bank aims to bring down its net non-performing assets ratio to below 6%, he is reported to have added.
Bank of India posted a loss of Rs 2341.20 crore in the October - December 2017 quarter and gross NPA stood at 16..93%, up from 13.38% in the year-ago quarter..
Shares of Bank of India are up nearly 13% at Rs 107.80 now. On BSE, the Bank of India counter has clocked a volume of 3.86 million shares so far in the session today, more than 4 times the average daily volume. On the National Stock Exchange, the counter has clocked a volume of over 41.4 million shares so far in the session.
Union Bank of India is up 12% and Oriental Bank of Commerce is up 11.2%. Andhra Bank, which plunged sharply in the previous session, is trading nearly 10% up now. Allahabad Bank, Bank of Baroda, Canara Bank and Syndicate Bank are trading higher by 8.5% - 9.5%.
Punjab National Bank is up with a gain of 7.5%. Indian Bank is gaining about 7.2% and IDBI Bank is adding 7%. Sector heavyweight State Bank of India is up 3.3%, contributing significantly to the gains of the key indices Sensex and the Nifty50.
The Nifty PSU Bank index is up more than 5% now. The index has shed about 14% in the last thirty days. In the last one year, the index has lost about 9%.
Even private sector bank stocks are trading higher today, thanks to the improved sentiment. South Indian Bank, Axis Bank and Federal Bank are up 2.5% - 3.4%. ICICI Bank is gaining nearly 2%, IDFC Bank is up 1.6% and RBL Bank is up with a gain of 1.5%. Yes Bank, HDFC Bank and IndusInd Bank are also notably higher, while Kotak Bank is underperforming.