PSU banks hit hard by bad loans; shares plummet up to 12%

Mumbai: Shares of state-run lenders plunged by up to 12.4 percent Wednesday as investor sentiment was hit by mounting bad loans and disappointing earnings reported by them.

Central Bank of India shares plummeted by 12.37 percent, Allahabad Bank slumped 9.61 percent and Punjab National Bank dived 8.99 percent.

Among others, Dena Bank shares declined by 7.52 percent while Indian Overseas Bank tumbled 5.20 percent on the BSE.

Besides, SBI scrip fell by 4.82 percent to Rs 158.95 ahead of the bank's financial results tomorrow.

All these stocks had hit their respective 52-week lows during the day.

The BSE bank index fell by 2.04 percent to settle at 16,519.15.

Central Bank of India yesterday reported a loss of Rs 836.62 crore for October-December 2015-16, against a profit of Rs 137.65 crore in the third quarter of the previous fiscal.

The asset quality worsened with the gross non-performing assets (NPAs) rising to 8.95 percent of the gross advances during the quarter, as against 6.2 percent a year ago.

Similarly, Dena Bank reported a loss of Rs 662.85 crore for the third quarter as against net profit of Rs 76.56 crore in the same quarter last year.

Gross NPAs as a percentage of total advances rose to 9.85 percent from 5.61 percent in the same quarter a year ago, Dena Bank said in a statement.

Allahabad Bank reported a loss of Rs 486.14 crore for the third quarter. The bank had earned a net profit of Rs 164.11 crore in the same quarter last year.

Gross NPAs as a percentage to total advances rose to 6.40 percent from 5.46 percent in the same quarter year ago.

Country's second largest PSU lender PNB's net profit plummeted by 93 percent to Rs 51 crore for the third quarter from Rs 774.56 crore in the corresponding quarter last fiscal due to higher provisioning for mounting bad assets.

The bank increased its provisioning and contingencies allocation to Rs 3,775.53 crore, a steep increase from Rs 1,467.77 crore parked aside in the same quarter a year ago.

The bank's asset quality deteriorated further as gross NPAs hit 8.47 percent of the gross advances as against 5.97 percent a year ago.