PSBs Struggle Despite Government Help - Chart Of The Day 24 May 2018 - Equitymaster
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PSBs Struggle Despite Government Help
May 24, 2018


Public Sector Banks (PSBs) have had a difficult year, to put it mildly.

After the euphoria of recapitalisation, bad loans have come to haunt them. Post the Gitanjali Gems fiasco, PSBs are yet to fully recover from its impact.

This underperformance was despite the huge boost they got from the government last year. On 24 October 2017, the government announced a Rs 2.11 trillion public sector bank (PSB) capitalisation plan. This move was aimed at reviving the PSBs from the bad loan mess.

The next day was a field day for investors in PSBs. PSB stocks went up between 30% and 47%. Despite this, the return in the year was way below average. PSBs like Punjab National Bank (PNB) have crashed more than 45% over the last one year.

Have we reached the bottom? Or there are more Nirav Modi stories waiting to come out?

We believe, rather than bottom fishing, one should look at banks run by strong management and a differentiated lending strategy available at reasonable valuations.

Data Source: BSE India

This Chart Of The Day was published in The 5 Minute WrapUp - Forget About SBI's Rs 77.18 Billion Loss... There's a Great Stock You Could Buy Instead

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