PSU bank stocks: PSU bank stocks may witness fresh selling

Feb 14, 2018, 08.04 AM IST

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“Banking stocks, especially corporate lenders, will be under pressure as they will see a sharp rise in NPAs in the next two quarters,” said Sanjiv Bhasin, executive VPmarkets and corporate affairs at IIFL.

Mumbai: Shares of public sector banks are headed for a slide again as the Reserve Bank of India’s move to scrap various loan restructuring programmes could again put the brakes on the much expected return to profitability.

The new guidelines of the central bank would lead to accelerated and early recognition of non-performing assets (NPAs) in the banking system and would entail higher provisioning expense, which could subsequently hit their profits in FY 2019, said analysts.

“Banking stocks, especially corporate lenders, will be under pressure as they will see a sharp rise in NPAs in the next two quarters,” said Sanjiv Bhasin, executive VPmarkets and corporate affairs at IIFL. “The government has given more capitalisation, but it wants all NPAs recognised too. Some of the banks reported low slippages for the quarter ended December but they will now have to recognise more cases as NPAs,” he said.

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