New Delhi, July 10: After hitting their 52-week and all-time lows, almost all the banking stocks are on the move again led by Corporation Bank and Bank of Baroda. Apart from a steady rise in the stock markets for the past five days, change in valuations appear to be the trigger. Nevertheless, signs of a higher interest regime could be one of the reasons for the current uptrend in the banking stocks as most of the banks will be able to raise their prime lending rate without any major hike in deposit rates as the system still has enough liquidity.The renewed enthusiasm in the counters of Bank of Baroda and Corporation Bank seems to be once again led by institutional interest in these scrips especially when these stocks have hit their all-time lows. These scrips have been fancied by FIIs ever since their listing on the bourses. Bank of Baroda, which offered shares at Rs 85, touched a high of Rs 176 four months after its listing.
In the past six trading sessions (from July 3-10), Bank of Baroda hasappreciated by 30 per cent from Rs 77.5 to the current level of Rs 101. The scrip had hit its all-time low of Rs 65 in June. Although the bank could manage only a 3.8 per cent growth in operating profit for the fiscal 1998, net profit zoomed by 65 per cent mainly on account of writebacks. The bank has posted a net profit of Rs 458.73 crore for fiscal 1998 against Rs 276.53 crore in the previous fiscal. Operating profit stood at Rs 806 crore against Rs 776.43 crore previous fiscal.
Corporation Bank, another FII favourite, has risen by almost 32 per cent in the past five trading sessions from Rs 96.45 on July 6 to Rs 127 on July 10. The scrip had touched a high of Rs 155 in April 1998 (against the public offer price of Rs 80) and a low of Rs 96.25 on July 3. Unlike BoB, Corporation Bank has posted an impressive growth in operating profit at Rs 302.84 crore, up 23 per cent, for fiscal 1998 against Rs 245.95 crore in fiscal 1997. Net profit jumped by 33 per cent to Rs 166.87 crore.
In the past six tradingsessions (from July 3 to July 10), some of the other banks like Bank of India (up 9.2 per cent), HDFC Bank (11.57 per cent), Oriental Bank of Commerce (8.9 per cent), ICICI Banking (15.6 per cent), Global Trust Bank (12.4 per cent), State Bank of Bikaner and Jaipur (0.4 per cent), State Bank of Travancore (4.4 per cent), IndusInd Bank (4.1 per cent) and Federal Bank (5.9 per cent) have gained on bourses. The banks like SBBJ, SBT, Dena Bank and Bank of India are still trading at a much higher discount to their offer prices. This is despite the fact that these banks have posted impressive growth in net profits for fiscal 1998.
Although bank credit continues to record a negative growth rate for the sixth consecutive fortnight (which declined by Rs 9400 crore since March 1998), the year on year (y-o-y) growth as on June 19 was 15.7 per cent as against 11.2 per cent in the corresponding period last year.
Deposits continue to grow with aggregate deposits as on June 19 amounting to Rs 6,19,857 crore. Thisindicates a Rs 2,230 crore (0.4 per cent) growth over the fortnight and Rs 14,447 crore (2.4 per cent) during the year so far.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
