Bank Stocks Regain Charm As Investors Flock To SBI, Bank Of Baroda Shares

Analysts said the winning streak of bank stocks is likely to continue as the numbers are confidence-inspiring, particularly the improvement in bad loans front.

Bank Stocks Regain Charm As Investors Flock To SBI, Bank Of Baroda Shares

High levels of bad loans had weighed heavily on state-owned banks in the past.(File)

New Delhi:

Government-owned State Bank of India (SBI) and Bank of Baroda rose to record high levels on Monday after their July-September earning numbers surprised markets.

Analysts said the winning streak of bank stocks is likely to continue as the numbers are confidence-inspiring, particularly the improvement in bad loans front.

In the one-month up to November 7, both SBI and Bank of Baroda have notched up over 17 per cent, while Nifty Bank rose 6.63 per cent.

They have outdone NSE Nifty in the same period, as the broader benchmark index jumped 5.5 per cent in the same period.

The country's biggest lender SBI rose to a 52-week high of Rs 622.90, buoyed by its biggest highest-ever quarterly profit at Rs 13,265 crore for the July-September period of 2021-22.

Bank of Baroda had reported a 59 per cent rise in net profit at Rs 3,313 crore for the same period.

Apart from profit growth, improvement in bad loan augurs well. Bank of Baroda, for instance, has reported a fall in gross bad loan levels to 5.31 per cent of the gross advances as of September 2022. It is the corresponding period of the previous year, it stood at 8.11 per cent

Bad loan levels in SBI too declined to 3.52 percent of the gross advances.

High levels of bad loans had weighed heavily on state-owned banks in the past. Poor asset quality of state-run banks had repeatedly hit headlines and was considered the root of all ills at PSU banks.

With marked improvement in asset quality of two of the biggest PSU banks, investors are flocking to bank stocks. Analysts also see the "good" show by SBI and Bank of Baroda on the bad loans front as a sign of better times ahead.

Commenting on the winning streak in the market, Prashanth Tapse - Research Analyst, Senior VP (Research), Mehta Equities, noted "FIIs are seen coming back to India".

Another lender that brought cheer to investors surprised the market is private sector Karnataka Bank. The stock has gained 60 per cent in the one -month period up to November 7.

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