State-owned banks have outperformed their private peers in the last one month, with the CNX PSU Bank index gaining more than 17% against 4.35% returns clocked by Bank Nifty.
Among state-owned lenders, shares of Union Bank of India (34.43%), PNB (22.20%), SBI (18.73%), Allahabad Bank (15.49%), Oriental Bank of Commerce (15.08%), Bank of Baroda (14.64%) and Canara Bank (12.99%) have been the major gainers. Among private players, only Yes Bank and Federal Bank have gained more than 10% in the last one month, as per data on Bloomberg.
Recently, US brokerage Goldman Sachs said it believes that the expected recovery in economy would address the asset quality concerns surrounding PSU banks. ?We have favoured private banks over public sector banks for the past three years on concerns about stressed assets and low capital adequacy ratios (CAR) for PSUs. However, macro recovery and potential for post-election reforms should see a gradual reduction in stressed loans on lower slippages and higher recoveries,? the brokerage said and upgraded PNB, Bank of Baroda and State Bank of India.
PSU Banks shares had earlier gained 3-10% on March 28 after the Reserve Bank of India?s decided to extend the Basel-III deadline.
?The capital conservation buffer of 0-2.5%, due to be implemented in phases over FY15-18, will now be implemented over FY16-19. To that extent, overall Tier-1 requirement as per Basel-III guidelines is now lower by approximately 60 bps over FY15-18,? Kotak Institutional Equities had said.