Indian Overseas Bank and Bank of India have not yet declared their quarter 3 ended 31-12-2020 results so far in the Banking sector.
All other 10 public sector banks have declared their Q3 results recently. All 12 PSBs are listed in the Stock Market. In the present scenario, Market expected a net profit of at least Rs.500 crore as the economy is growing in the post-Covid situation.
The third quarter and combined 3 quarter results.
Why we are discussing Net profit only in case of banks? It is due to Capital Adequacy Ratio imposed by International standards of Capital of Rs.9 to be maintained for every loan of Rs.100 that means 9% CAR to be maintained. Govt is infusing capital to the extent of Loss incurred only in PSBs. So the only way to increase Capital is earning profits considerably.
A bank which has earned say Rs.100 crore net profit can give an additional loan of at least Rs.1100 crore. So profit earning is vital for increasing the loan book, irrespective of deposits growth. So an increase in a deposit doesn’t increase Advances portfolio unless sufficient net profit is posted.
If a bank posts less profit, the growth in deposits will be used for investment only.
First and foremost SBI
SBI is the No 1 bank in India with Deposits of Rs.35.35 lakh crore and loans of Rs.24.56 lakh crore as at 31-12-2020. Around 22 % of the Banking business is carried by SBI. It is proud of us. The Net profit after tax for Q3 ended 31-12-2020 was Rs. 5169 crores, highest in PSBs.
In the earlier two quarters, net profit was Rs.4574 crore and Rs.4189 crore, respectively. So put together net profit for nine periods of this financial year was Rs.11,932 crore. That means with these profits, the advances portfolio can be increased by another Rs 130,900 crore. Kudos to SBI, its performance was just like Rishab Pant in Cricket.
The author predicted in these columns on January 3, 2021, that SBI share price would increase from Rs.254 to 350 by September 2021. But now it has crossed that and traded at Rs.395 yesterday. If the same trend continues the share price may touch Rs.500 by June 2021.
Next comes Canara Bank
Canara Bank posted a Net profit of Rs.696 crore the Q3, which was above the Market estimate. The previous two quarters was Rs.444 crore and Rs 406 crore respectively. So for the nine months, the period cumulative profit was Rs.1546 crore is satisfactory. The share price increased to Rs.160.70 yesterday. If the same profits maintained the share price may touch Rs.300 by June 2021. With these profits additional loans up to Rs.
20,000 crore can be given comfortably.
Next comes Indian Bank
This bank showing good results after the merger of loss-making Allahabad bank. It needs appreciation. The net profit for Q3 was Rs.514 crore. The two previous quarters net profit was Rs.412 crore and Rs.369 crore respectively. So cumulative profit for nine months was Rs.1296 crore. With these profits, additionally Rs.15,000 crore can be sanctioned. The share price is Rs.127 it may touch Rs.300 by September 2021, if profits are maintained.
Next comes PNB
Punjab National Bank posted a net profit of Rs.506 crore for Q3. The net profits for the other two quarters were Rs.621 crore and Rs.308 crore respectively. So cumulative profit for 9 months was Rs.1435 crore. It is just satisfactory. The advances can be augmented by another Rs. 17,000 crores with these profits. The share price is Rs.40 if profits maintained it may touch Rs.65 or 75 by June 2021.
Next comes Destination Baroda
Bank of Baroda posted a net profit of Rs.1061 crore for Q3. In September quarter, net profit was Rs.1678 crore. In June quarter, Loss was posted for Rs.864 crore. Market expected a lot being Gujarati dominated bank and all Gujarati companies performed well now. The additional loans can be given upto Rs.20,000 crore with these profits. The share price is Rs.82.50 . It may touch Rs.125 by September 2021 if profits are maintained.
Let us see Lowest performance in Banks .
UCO bank posted an eyewash profit of Rs.35 crore for Q3 and Rs.30 crore and 21 crores in the other two quarters. The share price is Rs.13.35 crore. Growth in deposits, advances and share price can’t be expected from this bank till September results in 2021. The share price is Rs.13.35 only. It speaks volumes.
Cebtral Bank of India
Central Bank of India a slow pace bank. It bats like Cricketer Pujara in Australia tour. The net profit for Q3 was Rs.155 crore, for Q2, it was Rs.161 crore and for Q1, it was Rs.135 crore. So cumulative profit for 9 months was Rs.451 crore only. The growth in the bank deposits, advances and share price competing with Nails pace. The Share price is Rs.14.90 only.
Share price talks much louder.
Bank of Maharashtra
Bank of Maharashtra also competing with Central bank of India, UCO bank. The net profit posted for Q3 was Rs.154 crore, for Q2 Rs.142 crore and Rs.105 crore for Q1. So Cumulative profit was hardly Rs.401 crore for nine months. The share price is Rs.16.15. Nothing to comment. Being Maharastra based bank it has the capacity to rise like a phoenix. Let us wait and see.
Huge Loss Bank Punjab & Sind Bank
Punjab & Sind bank was not merged with other Banks last year just like Bank of Maharashtra and Central Bank of India. But performance-wise all three are in the category.
P& S bank posted continuous losses unabated. The loss for Q3 was Rs.2375.53 crore. Q2 loss was Rs.401crore and Q1 loss was Rs.116 crore. The share price is Rs.14.45 only. It speaks volumes. It may take another two years to post a nominal profit of Rs.100 crore also.
There won’t be any buyers for Bank of Maharashtra, Central bank of India and Punjab & Sind bank even if sold at present share price also.
Market awaiting Q3 results of Bank of India and Indian Overseas Bank. Let us hope for better days for PSBs. Congratulations to SBI well done.