City Union Bank share price was trading lower by over 6 percent in the afternoon session on December 21, a day after the private sector lender said the Reserve Bank of India (RBI) found Rs 259-crore divergence in additional gross non-performing assets (GNPAs) in the fiscal year 2022.
The divergence consists of 13 borrower accounts with an outstanding balance of more than Rs 1 crore for an amount of Rs 230 crore and 218 borrowers with an outstanding balance of less than Rs 1 crore for an amount of Rs 29 crore.
“As per its final report on Risk Assessment, the RBI has reported divergence in additional gross non-performing assets (NPA) for the said financial year amounting to Rs 259 crore,” the bank said.
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RBI conducted an on-site inspection for the supervisory evaluation for the financial year 2021-22 from October 7 to November 18.
At 14:03 hrs City Union Bank was quoting at Rs 177.25, down Rs 11.65, or 6.17 percent on BSE. It has touched an intraday high of Rs 182.25 and an intraday low of Rs 172.
City Union Bank hit the lowest level since October 7, 2022 on intraday basis with robust volumes. The stock has been making lower highs lower lows formation for fourth straight session, especially since after forming bearish engulfing kind of pattern on the daily charts on December 15.
The stock has decisively broken its two upward sloping support trend lines adjoining October 3 and December 20 as well as June 22 and December 20 this year, though so far it seems to have taken a support at a low point of big bullish candle formed on October 7, 2022.
Research firm Investec, however, has a buy rating on the stock, with the target at Rs 240 a share, an upside of 34 percent from current market price. It is of the view that divergence would have no material impact on estimates. The bank has enough headroom to provide and yet meet “our estimates” for FY23, the research firm said.
The bigger risk was the pending RBI nod for reappointment of CEO N Kamakodi, it said.
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