Banking stocks bleed on D-Street ahead of the quarterly results

On Friday, May 13, Allahabad Bank, Bank of Baroda, Central Bank of India, Dena Bank, UCO Bank, Union Bank will be declaring their results for the year and quarter ended March 2016. The bad loans of public sector banks remain a major concern for the growing banking sector from quite a long period. The Nifty Bank cracked almost 1.94 per cent and is trading at 16674 on an intraday basis.

Allahabad Bank, Bank of Baroda, Central Bank of India, Dena Bank, UCO Bank, Union Bank have declined by 2.81 per cent, 1.87 per cent, 2.22 per cent, 2.39 per cent, 7.32 per cent and 3.3 per cent, respectively, on bourses in early trades.

Meanwhile, UCO Bank has declared its quarterly results on Friday. Its total Income has decreased by 9.84 per cent to Rs 4745 crores in Q4FY16 as compared to same period in previous financial year. The bank has posted a net loss of Rs 1715 crores in Q4FY16 against net profit of Rs 209 crores in Q4FY15. The asset quality of UCO Bank has worsened in Q4FY16. The gross NPA stands at 15.43 per cent amounting to Rs 20907 crore in Q4FY16 against 10.98 per cent amounting to Rs 14932 crore in Q3FY16. The net NPA stands at 9.09 per cent amounting to Rs 11444 crore in Q4FY16 against 6.51 per cent amounting to Rs 8409 crores in Q3FY16.

Bank of Maharashtra has also declared their quarterly results on Thursday. The banks’ gross NPA also ballooned to 9.34 per cent in Q4FY16; while 7.97 per cent in Q3FY16. Its net NPA stands at 6.35 per cent against 5.52 per cent in Q3FY16.

Another major reason for bleeding of banking stocks is the gap down opening on Friday morning. Bears are reigning over the markets, as Security Exchange Board of India (SEBI) is all set to tighten KYC, transfer norms on Participatory notes (p-notes). This will ensure norms to stop black money flow in the Indian equity markets.