Q3FY23 was a tepid quarter that saw Nifty50 earnings rise 11 percent YoY led by the banking and financial services sector on the back of margin expansion and improved asset quality.
"Most banks reported a resilient 3QFY23 fueled by healthy loan growth, robust margin expansion, and consistent asset quality improvement. Growth trends were broad-based, with the corporate segment, too, exhibiting a strong recovery. PSBs posted an improvement in their operating performance driven by strong 3-6 percent quarter-on-quarter (QoQ) loan growth across banks amid a sharp recovery in the corporate segment," said Motilal Oswal in an earnings review report.
On the back of robust performance by the banks in Q3, let's take a look at 3 star performers from this space, that posted over 100 percent rise in their net profit:
Union Bank of India: The public sector lender reported a 107 percent surge in its net profit at ₹2,245 crore in the December quarter on the back of healthy growth in net interest income (NII) and non-interest income. The public sector bank had reported a net profit of ₹1,085 crore in the year-ago quarter. Its NII rose 20 percent YoY at ₹8,628 crore ( ₹7,174 crore in the year-ago period).
Net interest margin also rose to 3.21 percent from 3 percent in the year-ago quarter. Gross non-performing assets (GNPAs) position improved to 7.93 percent of gross advances as of December-end 2022 against 8.45 percent as of September-end 2022. Net NPAs too declined to 2.14 percent of net advances against 2.64 percent.
The lender currently trades at a single-digit P/E ratio of 9.38 and a healthy dividend yield of 2.63 percent. It has a total of 8,710 branches and 10,953 ATMs.
The stock has risen 65 percent in the last 1 year but is down over 15 percent in 2023 YTD.
IDFC First Bank: The private-sector lender delivered a strong performance on all fronts including profitability, deposits, loan growth as well as asset quality. Its net profit for the third quarter of FY23 climbed by 115 percent YoY to ₹605 crore versus ₹281 crore in the same quarter last year driven by robust growth in core operating income. The bank’s NII also grew 27 percent YoY to ₹3,285 crore in Q3FY23 from ₹2,580 crore in Q3FY22.
As of December 31, 2022, the bank's overall GNPA and NNPA were 2.96 percent and 1.03 percent, respectively, compared to GNPA of 3.96 percent and NNPA of 1.74 percent reported in the same quarter of the previous fiscal year.
The lender trades at a P/E ratio of 285.05, making it the second-most expensive private sector bank, after Bandhan Bank. Its CASA deposits have now reached 50 percent compared to a mere 8.68 percent in December 2018.
The stock jumped 23 percent in the last 1 year but is down 8 percent in 2023 YTD
UCO Bank: On the back of lower bad loan provisions and a sizable recovery from written-off accounts, UCO Bank's net profit surged 110 percent in the third quarter to ₹653 crore against ₹310 crore in the year-ago period.
“This is the highest quarterly net profit for the bank in its 80 years of existence," managing director Soma Sankara Prasad said.
Its NII in the last quarter rose to Rs1,951.87 crore as against ₹1,762.61 crore same quarter last year, clocking a year-on-year growth of 10.74 percent. The bank's net interest margin for the December quarter came in at 2.99 percent, an improvement from 2.84 percent seen in the preceding quarter. Net non-performing assets (NPAs) fell to ₹2,406.90 crore (1.66 percent of total advances) at the end of December 2022 from ₹3,333.59 crore (2.81 percent of total advances) as of 2021.
UCO Bank is a mid-cap PSU bank that currently trades at a P/E ratio of 32.91. The stock has risen 100 percent in the last 1 year but is down around 20 percent in 2023 YTD