Canara Bank, Bank of India, Bank of Baroda: State-run lenders surge on reporting strong credit growth in Q2

Shares of state-run lenders were trading higher on Monday, October 5, as they reported strong credit growth in second quarter of the current financial year.

The measure of government-owned banks on the National Stock Exchange (NSE), NIFTY PSU Bank index, advanced as much as 2.2% to hit an intraday high of 8,117 led by gains in Canara Bank, Bank of India, Bank of Baroda, and Punjab National Bank.

Bank of Baroda said that its global advances rose 18.27% YoY to ₹15.12 lakh crore and deposits advanced 17% to ₹17.51 lakh crores.

The bank’s domestic advances rose 13.51% to ₹11.87 lakh crore out of which retail advances, which include personal loans and credit cards, climbed 19% to ₹3.24 lakh crore.

The Bengaluru-based Canara Bank reported that its global business jumped 16% annually to ₹30.70 lakh crore at the end of September quarter.

Its domestic loan book advanced 16.83% to ₹12.63 lakh crore while its global loan book rose 19.35% to ₹13.73 lakh crore.

The bank's portfolio of domestic retail, agriculture, and MSME loans rose 21% to ₹8.12 lakh crore.

Bank of India’s retail loan portfolio in September quarter rose 19% to ₹4.12 lakh crore and its total domestic loan book advanced 17.7% to ₹7.03 lakh crore.

The state-run lender's total business jumped 21.07% to ₹18.91 lakh crore from ₹15.62 lakh crore a year earlier.

Domestic deposits also showed a strong picture as its gross domestic deposits rose 23.3% to ₹9 lakh crore.

Amid strong numbers posted by PSU banks, global investment bank Goldman Sachs said that aggregate PSU domestic credit growth stood at about 16% YoY versus 15% last quarter.

System credit growth accelerated by about 200 basis points (bps) to 18% as of September 15 and PSU domestic deposit growth rose to about 13% YoY from about 10%, Goldman Sachs said.

PSU banks continue to cede incremental loan market share to the system and liquidity advantage of state-owned banks has diminished as liquidity coverage ratios converge.

Stronger FCNR(B) mobilisation has improved funding availability for private banks and private banks are seen at a cyclical inflection and are set to regain market share, Goldman Sachs added.

As of 12:40 pm, NIFTY PSU Bank index came off intraday high and traded 1% higher at 8,015, outperforming the NIFTY50 index which was trading on a flat note.