Centre considering to offload 5-10% stake in some public sector banks: Report

The Centre is considering to divest 5 to 10 per cent stake in public sector lenders following a sharp rally in share prices of public sector banks (PSBs) of late. A report in the Economic Times said that a detailed roadmap is expected soon.

The Centre owns 80 per cent in six state-run banks, Bank of India, Indian Overseas Bank, Punjab & Sind Bank, Bank of Maharashtra, Central Bank of India and Uco Bank.

The stake sale can be conducted through the offer-for-sale route for lenders that are not inclined toward a rights issue, sources quoted in the report.

In case banks need capital, then a follow-on public offer can be explored, and the government will divest some stake and the lender will issue fresh equity in the same proportion, the source told ET.

"Banks will be submitting their capital-raising plans, and based on those assessments, a roadmap may be drawn up for each lender," the official told ET, adding that the stake sale timing will depend on the market conditions. It might happen next fiscal year.

In the last one year, the Nifty PSU Bank index has yielded 34 per cent against a 6.9 per cent rise in the Nifty Private Bank Index in comparison to the benchmark Nifty 50's 6.4 per cent in the same period.

The government is already divesting its stakes in IDBI Bank, which is now categorised as a private-sector lender.

Q2 results

For the September quarter 2023-24 (Q2FY24), Bank of India reported a standalone net profit of Rs 1,458 crore, which is almost higher by 52 per cent as against Rs 960 crore recorded in the year-ago period.

The public sector lender's net interest income (NII) stood at Rs 5,740 crore in Q2FY24, improving by 13 per cent as against Rs 5,083 crore reported in the same quarter of the previous fiscal.

State-owned Bank of Maharashtra (BoM) has announced a profit of 71.8 per cent at Rs 919 crore year on year (Y-o-Y) at the end of the July-September quarter (Q2) for the financial year 2023-24 (FY24) in its consolidated results.

In Q2 FY23, the bank recorded a profit of Rs 4,317 crore. The total income for this quarter also went up 32.8 per cent Y-o-Y at Rs 5,735 crore from Rs 4,317 crore.

Gross non-performing assets (NPA) are down to 2.19 per cent in Q2FY24.

State-owned UCO Bank reported a 20 per cent decline in its net profit to Rs 402 crore in Q2 FY24. The bank had reported a net profit of Rs 505 crore in the corresponding quarter a year ago.

Total income of the Kolkata-headquartered lender during the July-September period rose to Rs 5,866 crore from Rs 4,965 crore in the year-ago period, UCO Bank said in a regulatory filing.

Public sector lender Indian Overseas Bank reported a growth of 25 per cent in net profit at Rs 625 crore, compared to Rs 501 crore in the corresponding period last year. The bank's net interest income (NII) rose 22 per cent at Rs 1,114 crore for the quarter ended September 2023 vis-a-vis Rs 1,135 crore in the year-ago period.

The bank's gross non-performing assets (GNPA) declined to 4.74 per cent from 8.53 per cent in the same quarter of the previous fiscal due to an improved asset quality.

Public-sector bank Punjab & Sind Bank (PSB) reported a 31.7 per cent fall in net profit to Rs 189.9 crore for the July-September quarter of FY24, as against Rs 278.1 crore last year. The bank's gross non-performing assets (GNPAs) declined to 6.23 per cent from 9.67 per cent in the September quarter of the previous fiscal. Net non-performing assets (NNPAs) fell to 1.88 per cent from 2.24 per cent.

Total income of the bank during the July-September period rose Rs 2,674 crore against Rs 2,120 crore in the corresponding period of FY23.

State-owned Central Bank of India reported a massive 90 per cent rise in its net profit to Rs 605.4 crore for the September quarter of FY23-24, against Rs 318.2 crore in Q2 FY22-23. During the quarter, Central Bank of India's total income rose to Rs 8,412 crore from Rs 7,065 crore a year ago, the bank said in a regulatory filing.

Its gross non performing asset (NPA) improved to 4.62 per cent in the quarter under review. Earlier the government lender had reported NPA at 9.67 per cent in September FY22-23.

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