PSU Banking stocks refer to shares of banks that are publicly listed and their majority share is owned and controlled by the government. Some famous PSU bank stocks are State Bank of India and Punjab National Bank.
PSU banks had their fair share of history with bad loans. But the good news is that the government is working with these banks to turn them around. If you want to invest in PSU stocks, you must understand the impact of government policies and economic conditions.
Some other types of banks are private banks and small finance banks. Private banks are owned by private individuals or business houses. Small finance banks aim to promote financial inclusion by offering services to underserved communities.
Banks play a critical role in the economy and their stocks form a large part of indices like the BSE Sensex and NSE Nifty. There are special indices like Bank Nifty and BSE Bankex that track the performance of banking companies.
Investors can either buy individual bank stocks or invest in mutual funds focused on banking indices to benefit from the sector’s overall performance.
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India has 12 PSU banks. Let's understand more about the performance of these banks:
|
S.No.
|
Name |
Market Capital (in Crores) |
Quarterly Net Profit (in Crores) |
| 1 |
State Bank of India |
719235 |
20094.4 |
| 2 |
Bank of Baroda |
126212 |
4764.03 |
| 3 |
Punjab National Bank |
120768 |
3991.38 |
| 4 |
Indian Overseas Bank |
103188 |
632.81 |
| 5 |
Canara Bank |
94634.1 |
4098.24 |
| 6 |
Union Bank |
85488.8 |
3641.78 |
| 7 |
Indian Bank |
69725.9 |
2571.37 |
| 8 |
UCO Bank |
54555.3 |
550.96 |
| 9 |
Central Bank |
49802.5 |
944.7 |
| 10 |
Bank of India |
47680.1 |
1889.9 |
| 11 |
Bank of Maharashtra |
41911.2 |
1332.77 |
| 12 |
Punjab & Sind Bank |
35529.3 |
181.5 |
State Bank of India is a Fortune 500 company and a leading public sector financial institution. It is one of India’s largest and oldest banks and has a history of over 200 years.
SBI has 22.84% of the total Indian market in deposits and 19.69% in advances with a customer base of 45 crore individuals.
Around 75% of corporate loans are rated A or higher by credit rating agencies. Public sector undertakings and government departments make up 38% of the corporate loan book.
SBI has delivered a 98.7% CAGR over the past five years. The bank has also maintained a dividend payout ratio of 18.1%.
The Government of India owns 63.97% of the Bank of Baroda. In 2019, it merged with Vijaya Bank and Dena Bank and became the third-largest PSU bank in the country.
The bank operates ~8,168 branches across India, with 35% located in rural areas, and 94 branches overseas. BOB Capital Market Ltd provides investment banking, IPO services, debt syndication, and wealth management.
The bank offers a dividend yield of 3.11%. BOB has a robust profit growth with a 76.8% CAGR over the last five years and has maintained a healthy dividend payout ratio of 19.6%.
PNB is India’s second-largest public sector bank and was founded in 1895 in Lahore. It became government-owned after nationalisation in 1969. PNB serves around 180 million customers through 12,248 branches and 13,500 ATMs.
The bank also operates in countries like the UK and Dubai, with a market value of Rs 1,18,754 crore. Over the last five years, PNB has shown strong profit growth with a 24.2% CAGR. It has also maintained a good dividend payout of 19.2%.
IOB was founded by M. Ct. M. Chidambaram Chettyar. Since its inception, IOB has specialised in foreign exchange services and overseas banking.
IOB was the first Indian bank to introduce a personal loan scheme which led to consumer credit expansion in India.
Looking ahead, IOB expects credit growth of 13-14% and deposit growth of 11-12% in FY25. The bank has achieved 21.9% profit growth (CAGR) over the past five years.
Canara Bank was established in 1906 in Mangalore and is one of India’s oldest banks. It was also nationalised in 1969 and has a global presence with offices in London, Dubai, and New York.
Canara Bank’s revenue has grown at 19.19% annually over the past five years, with its market share increasing from 8.74% to 10.13%. Over the past five years, it has achieved an impressive profit growth with a CAGR of 90.8%. It has maintained a dividend payout ratio of 19.2%.
Summing Up
The banking industry can be compared to the fuels used in cars and stands as the driving force behind the growth of an economy. With factors like rising interest rates, stringent regulations, and solid earnings, the outlook for these banks appears positive.
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