This is My Aug'21 Blog, See how relevant it is now in Nov'21 ...do share your views!
Worst performer for share holders, Result of unwanted 'political interference', double-digit gross NPAs and many more issues. Public sector banks have come a long way upside down. almost all banks have given negative returns to their shareholders, thanks to to continuous loss making wholesale business. In fact, in case of many PSU's even retail banking is a loss making proposition which is very surprising.
Today I reviewed Central Bank of India's quarter 1 result where they have generated losses even in retail banking. This is ridiculous and this must be stopped. Good thing is that they have already reached to the bottom and now they can go only in upward direction. Thanks to to Modi government's initiative to merge loss making small banks and converting into a larger PSU Bank will give good returns in the time to come.However, it is a time consuming process but results will be surely be in favour of the bank and its shareholders.
Many banks, like Vijaya bank and Dena Bank have already merged with Punjab National Bank. Mahila Bank, State Bank of Saurashtra and State Bank of Hyderabad have already been merged with State Bank of India. Soon OBC Oriental Bank of commerce, Central Bank and few other banks will also be merged. These banks have already been good for their customers but have remained extremely poor performer for their shareholders. But this is going to change very soon. Result declared by Central Bank of India today is just the beginning where they have reported good profit which includes increased income, reduced expenses and reduced provisions despite moratorium declared by reserve Bank of India. this is just the beginning and it will be premature to conclude it right now that everything is alright but we can surely conclude that they are on the right track. Provisions are made, bad loans are being recovered , profitability is being achieved again. so all these are good signs.
My recommendation will be to all shareholders that please watch price movement of only two banks and keep them on your radar. First is State Bank of India which is the largest bank of India and despite being largest its market capitalisation is far lesser than second largest which is HDFC Bank. SBI will soon gets its lost ground and we'll get the respect which it deserves.
Second stock which I would recommend you to watch out is Punjab National Bank. In fact, there are two stocks one is Punjab National Bank itself and second is PNB housing which is the housing division of this Bank. I would request you to go through the results which has been declared by Punjab National Bank housing of quarter 1. These results are robust and future sounds good. So if you are a long term investor, these stocks should be on your radar. However because of moratorium and high NPS Bank shares will remain under pressure for sometime. And believe me, this will be an opportunity for a long investor to jump in. So watch out for the correct time and when you find the bottom level ,you can accumulate few of them for sure.
Thank you very much and goodbye
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