Bank stocks rally after Supreme Court verdict in loan moratorium case


Bank stocks on Tuesday rebounded from their intra-day lows on stock exchanges after the Supreme Court dismissed requests from various trade associations and legal entities to extend the six-month loan moratorium period offered by the Reserve Bank of India (RBI), adding that a full waiver of interest during the moratorium also cannot be granted.

The SC said no instructions could be given to the government or the RBI to announce specific financial packages or reliefs, and considered that it could not issue instructions to provide relief to particular sectors in the government. above others.

State-owned banks were the main winners with the Nifty PSU Bank index up 3.6%, while the Nifty Bank and Nifty Private Bank indices rose 1.7% and 1.6% respectively . In comparison, the benchmark Nifty50 rose 0.68% in intraday trading.

However, the indices partially reduced their earnings, as the Supreme Court ordered that there be no interest on interest and no penalty interest on any amount during the moratorium on loans from no borrowers.

At 11:20 a.m., the Nifty PSU Bank index was up 2.5%, while the Nifty Bank and Nifty Private Bank indexes were up 1.3%, compared with a 0.51% increase for the Nifty50 index.

Among individual stocks, State Bank India (SBI) was trading 1.5% higher at Rs 372.50, after hitting a high of Rs 377.95 in intraday trading on the NSE. Bank of Maharashtra and Indian Overseas Bank rose 7% each, while Bank of Baroda, Central Bank of India, Indian Bank, Canara Bank, Union Bank of India and Punjab National Bank rose 2 to 3 percent. hundred. hundred.

Private-sector Bandhan Bank, HDFC Bank, ICICI Bank, RBL Bank, IDFC First Bank, IndusInd Bank and Federal Bank were each trading more than 1 percent higher.

Meanwhile, according to Motilal Oswal Securities, the banking industry is entering a golden period; with the focus on asset quality issues towards strong growth opportunities, market share gains and the earnings pendulum towards high RoE over ten years. The big banks cautiously forecast early loan losses and raised the largest amount of capital, preparing them for a sustained recovery. Private banks are well placed to accelerate market share gains.

After the perceived severe impact of the COVID-19 pandemic on 1HFY21, asset quality was much better than expected, thanks to improved collection efficiency (around 97% for large banks), slippages controlled (pro forma) and lower restructuring (v / s previously reported), the brokerage firm said in a financial sector update.

Although slippages are likely to remain high over the next few quarters, the pro forma asset quality in December 20 indicates a reduced impact. Most companies have already predicted the likely increase in slippage and have additional supply cushions. We expect fiscal 22E to be a normalized year in terms of cost of credit, which would give a significant boost to earnings, especially for business-focused banks, he said.

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