Recent gains in banking stocks are being attributed to an acceleration in credit growth, a decline in non-performing assets (NPAs), double-digit growth in net interest income and rating upgrades from the top global brokerage firms. Indian banks are performing better than they have in many years in the current environment. According to the recent report by Financial express, for the first time since FY08, the government is unlikely to infuse capital into state-run banks this fiscal as public sector banks reported strong numbers in FY22 and in the first quarter of FY23.
The Nifty Bank Index has increased by roughly 5,152 points in the past six months, going from 36,163 to 41,315 a jump of almost 14.24%. The benchmark Nifty 50 has returned 5.32% over the same time frame.
Further, the Credit expansion in the banking system remains robust. According to RBI data, bank credit growth accelerated to 16.28% for the fortnight that ended September 23.
Below is a list of banking stocks priced under ₹100 that have returned 35-105% in the last six months.
Karur Vysya Bank
The stock, which reached a low of ₹45 in June, has since risen sharply to ₹104.35, giving investors a return of almost 130%. Shares of this private sector lender have rallied nearly 30% in the last month, which is 20.71 per cent higher than the Bank Nifty, which returned 9.29 per cent in the same period. Moreover, the stock generated a return of 107.4% over the last six months.
During Monday's intraday trade, shares of Karnataka Bank climbed the 100-level mark for the first time since January 2018, reaching a new 52-week high of ₹104.80 before closing the day with 6.29% gains at ₹104.
On October 21, Karur Vysya Bank reported a 52 per cent jump in its net profit at ₹250 crore for the quarter that ended September 30, on the back of double-digit growth in net interest income and a fall in bad loans. The bank posted a net profit of ₹165.4 crore in the year-ago quarter.
The bank's net interest income grew by 21 per cent to ₹831 crore during the quarter, from ₹680 crore in the year-ago period. The net interest margin (NIM) of the bank rose to 4.07% during Q2, compared to 3.74% in the September 2021 quarter.
IDFC First Bank
After reporting the highest net profit of ₹474 crore for the quarter that ended June 2022, IDFC First Bank posted a whopping 267% YoY rise in its consolidated net profit to ₹555.6 crore in Q2, which is the highest to date. The bank posted a net profit of ₹151 crore in the same quarter of the last fiscal.
The bank's net interest income climbed 32 per cent at ₹3,002 crore, while fee and other income spurted by 44 per cent to ₹945 crore in the September quarter of FY23.
The gross non-performing assets (NPA) came down to 3.18 per cent of the gross advances as of end-September 2022 from 4.27 per cent a year ago.
From December 2021 to June 2022, the stock lost almost 44% of its value and touched a 52-week low. However, in June, the stock began to rise and has since returned 66.72% by moving from ₹29.15 to the current level of ₹56.15. In the last six months, the stock returned 41.3%
The stock touched a 52-week-high of ₹59.4 on October 24th, 2021 and a 52-week-low of ₹29 on June 22nd, 2022, indicating that at the current level the stock is trading 93.78 higher than its 52-week low.
Union Bank of India
Shares of Union Bank of India have delivered a fabulous return of over 28.6% during the past one-month and 36.6% in the past six months. The stock climbed from ₹33.75 on May 12, 2022, to its current level of ₹54.20, representing a return of 60.59%. On the technical charts, the stock is trading 35.19% above its 200-day moving average.
For the September ending quarter, the bank posted a 21% YoY growth in net income at ₹1,848 crore, driven by higher recoveries, improved asset quality, and margin expansion.
The bank's net interest income, grew 21.61 per cent to ₹8,305 crore as the bank passed on as much as 165 bps of the 190 bps repo rate hike by the RBI to borrowers, boosting its net interest margin by 20 bps to 3.15 per cent, PTI reported.
On the other hand, net interest income rose 21.61 per cent to ₹8,305 crore, but non-interest income declined 17.65 per cent to ₹3,276 crore as its treasury income more than halved to ₹400 crore from over ₹945 crore a year ago, the report said.
The gross NPAs of the bank declined by 419 bps to 8.45 per cent, or ₹65,391 crore of total advances, while net NPAs came down by 197 bps to 2.64 per cent, or ₹19,193 crore in the September quarter.
Karnataka Bank
Shareholders of Karnataka Bank seem to be happy with its stock performance over the last six months. Since June, the stock has risen gradually from ₹62 to the current level of ₹97.55, representing an increase of about 57.33%.
During Monday's intraday, the share price opened positively and touched a new 52-week high of ₹97.60. It then closed nearly 1.45% higher at Rs. 96.70.
The share of CASA (current account and savings account) deposits in Karnataka Bank stood at 32.82 per cent of all deposits during the second quarter of 2022-23, said Mahabaleshwara MS, MD and Chief Executive Officer of the Bank.
The core deposits of the bank stood at ₹81,628.97 crore during Q2 2022-23. Gross advances grew at a satisfactory rate of 10.09 per cent during the quarter, he said.
Ujjivan Small Finance Bank
On October 6, shares of Ujjivan Small Finance Bank rose nearly 6% after the bank reported a 44% increase in gross loan book at ₹20,938 crore at the end of September 2022.
In Q1FY23, the bank reported its highest-ever quarterly profit at ₹203 crore on higher interest income and a fall in bad loans as well as strong disbursements. Sequentially, the net profit was up by 60.4% from ₹126.52 crores.
The bank reported a net loss of ₹233 crore for the June quarter of last year. Losses persisted for the bank for the following two quarters but finally ended with a net profit in the March 2022 quarter.
In Q1 FY23, the lender's interest income increased by 41.1% to ₹905.37 crore from ₹641.66 crore in Q1 FY22. In contrast, other income increased to ₹95.1 crore from ₹73 crore.
The share price of Ujjivan Small Finance Bank is trading near its 52-week high of ₹26.4. The stock has increased by about 47.80% over the past six months, going from levels of ₹17.05 to ₹25.20.
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