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Credit Suisse expects PSU banks to report treasury loss of Rs 20K cr in Q4; overweight on SBI, BoB

Credit Suisse continues to prefer private banks over PSU banks and has overweight calls on State Bank of India with a target of Rs 381 and Bank of Baroda with target of Rs184 while it is underweight on Bank of India with a target of Rs 122 per share.

March 07, 2018 / 09:27 AM IST
 
 
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The Indian benchmark indices opend on a negative note on Wedneday morning with the Sensex falling 123 points while the Nifty was down 50 points and was trading below the 10,200 mark.

The Nifty PSU banking index continued to head lower and was trading down 1.6 percent dragged by Punjab National Bank, State Bank of India, Allahabad Bank, Canara Bank and Andhra Bank.

The Nifty PSU bank index cracked yesterday and closed 2.87 percent lower after investigation deepened in the PNB fraud case. The largest contributor to the index fall was Bank of India which plunged 6.46 percent, hitting fresh 52-week low. Syndicate Bank ended lower by 5 percent.

Global research firm Credit Suisse has come out with a report on PSU banks. It is of the view that the bond hit will add to Q4 woes while over ownership will weigh on earnings. It feels that the PSU banks are staring at potential treasury loss of Rs 20,000 crore in Q4.

The house further said that the banks' current 10 percent excess bond holdings is the highest in last 12 years, adding that RBI needs to raise HTM threshold or treasury buyback to contain MTM hit on banks.

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Credit Suisse continues to prefer private banks over PSU banks and has overweight calls on State Bank of India with a target of Rs 381 and Bank of Baroda with target of Rs 184 while it is underweight on Bank of India with a target of Rs 122 per share.

At 09:22 hrs State Bank of India was quoting at Rs 251.55, down Rs 4.95, or 1.93 percent. It has touched an intraday high of Rs 255.95 and an intraday low of Rs 251.35.

Bank Of Baroda was quoting at Rs 133.25, down Rs 1.90, or 1.41 percent. It has touched a 52-week low of Rs 132.50.
Sandip Das

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