BoB, PNB hit fresh 52-week high, regain Rs 50,000-crore market cap

Shares of Bank of Baroda (BoB) and Punjab National Bank (PNB) hit fresh 52-week highs, regaining Rs 50,000 market capitalisation (m-cap) on Tuesday on the back of a stable outlook.

Individually, BoB rallied 6.5 per cent to Rs 102.85 on the back of heavy volumes. The stock of state-owned lender has outperformed the market by surging 35 per cent in the past one month, as against the S&P BSE Sensex, which has gained 2.5 per cent during the same period.

At 09:59 am, BoB was trading 5 per cent higher at Rs 101.40, relative to the Sensex’s 0.66 per cent gain. A combined 46.2 million equity shares had changed hands on the counter on the NSE and BSE till the time of writing of this report. Currently, the bank has an m-cap of Rs 52,515 crore, BSE data shows.

Shares of PNB, too, hit a 52-week high of Rs 47.40, up 5.5 per cent on the BSE in the intra-day trade today. The bank’s m-cap stood at Rs 51,641 crore, data shows. In the past one month, the stock has surged 25 per cent.

On October 6, 2021, Moody’s Investors Service (Moody’s) affirmed the ‘Ba1’ long-term local and foreign currency deposit ratings of BoB, PNB, Canara Bank and Union Bank of India, as well as their ‘b1’ BCAs. Their rating outlook has been changed to stable from negative.

“The affirmation of ratings and BCAs, and change in outlook to stable from negative, reflect the fact that despite the significant economic challenges since the onset of the pandemic, their asset quality has only deteriorated modestly while capital has improved,” Moody’s said.

It added: Corporate asset quality has improved as legacy issues have been resolved while deterioration in retail asset quality was relatively moderate. Asset quality will further improve if economic activity continues to normalize.

The core equity Tier 1 (CET1) ratios of these four banks were higher at end June 2021 compared to March 2020. Capital increased as all four raised equity from capital markets. The ability to access equity capital markets is a key credit positive as it reduces the dependence on the government for capital, according to the agency’s analysis.

Profitability will improve over the next 12-18 months as credit costs will decline in line with a lower nonperforming loans (NPL) formation rate. Funding and liquidity remain the strongest parts of their credit profiles, as reflected in high share of retail deposits and low cost of funding.

Moody’s continues to assume a very high level of government support in their ratings, leading to unchanged three notch uplift in their deposit ratings. These four banks rank among the seven biggest banks in India, with deposit market shares ranging between 6-7 per cent. Their systemic importance is further enhanced by the strong links to the government, it said.

Meanwhile, the stock of Canara Bank, too, hit a fresh 52-week high of Rs 207.15, up 2.6 per cent, having rallied 31 per cent in the past one month. Union Bank India, too, gained 2.6 per cent at Rs 49.60 in the intra-day trade today. The stock had hit a 52-week high of Rs 51.70 on October 21, 2021. In the past one month, it has zoomed 44 per cent.

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