Having knowledge about ex-dividend date and record date should help an investor to get full value from dividends. Especially when the stock is a PSU bank, investors have all the reasons buy the stock. Private banks, that have been all-time favourites of institutional investors, lost their spotlight to public sector banks. Amidst all these, there is one PSU bank share which is likely to announce dividend.
PSU banks continue to touch the sky as a result of strong retail participation. So far in 2024, majority of the public sector banks provided double-digit returns to their investors. However, private sector banks provided single to double-digit decline in share prices.
PSU banking index v/s private banking index: A comparison
On the YTD basis, Nifty PSU Bank saw an increase from ~5,786.20 points to ~7,267.02, exhibiting a strong increase of ~25.6%. On the other hand, Nifty private bank index saw a decline from ~24,756.50 points to ~24,028.78 points over the same time period. This index has fallen ~2.9%.
This strong increase in the PSU banking index was well-supported by their optimistic medium-to-long term outlook as a result of stable asset quality outlook. Analysts believe that PSU banks should be supported by lower credit costs.
Recent performance of the PSU banking index was supported by reports which say that public lenders might oppose RBI’s guidelines about imposing higher provisions for under-construction projects.
RBI made a proposal that lenders are required to set aside increased provisions for all infrastructure projects which are under-construction. They are also required to ensure strict monitoring of emerging stress. Post this news, experts believe that public-sector lenders are disproportionally impacted.
This is because these PSU banks have increased exposure to infrastructure loans. Experts and analysts believe that PSU banks’ valuations remain at comfortable levels, despite economic uncertainty.
Past performance of PSU banks
If we talk about past performance, public sector banks have posted strong set of numbers for the quarter ended December. This performance stemmed from increased interest income, reduced credit costs, along with improved asset quality.
Combined profit of 12 Indian public sector banks (PSBs) in 3Q24 went up by ~3.84% to INR 30,297 crore in comparison to INR 29,175 crore seen during same period last year.
Apart from these factors, the PSU banks benefitted from the interim budget 2024. Public sector banks and housing finance stocks came under the spotlight. Reducing fiscal deficit and borrowing estimates provided the much-needed boost for PSU banks.
Per the reports, PSU banks continue to make up a higher part of government bonds in comparison to private banks.
Not only this, FY24 was a strong year for public sector bank shares. Nifty PSU Bank Index soared ~88.5% in FY24 in comparison to ~14.25% rise in Nifty Private Bank Index.
PSU bank share which is likely to announce dividend
Given these factors and expected optimism around performance of PSU banks in remainder of 2024, this PSU bank share which is likely to announce dividend.
Leading brokerage houses such as Motilal Oswal, JM Financial and Emkay Global recommended the investors to purchase the shares of Canara Bank. Its shares have been scheduled to split soon. This is the first time that this PSU lender has announced stock split and that too in the ratio of 1:5.
It has announced highest-ever dividend payout of INR 16.10 per share. Canara bank has fixed 17th June 2024 as a record date for determining eligible shareholders.
Performance of Canara bank
Canara Bank has recently released its results for quarter ended March 2024. It saw ~18% growth in its standalone net profit at INR 3,757 crore. During the same period of last year, it was at INR 3,174 crore. Net interest income (NII) for 4Q went up by ~11% year-on-year (YoY) to come at INR 9,580 crore.
It saw improved asset quality as compared to year-ago period, with gross non-performing assets (GNPA) ratio coming down to 4.23% during 4Q. This compares to ~4.39% in a quarter ago period. Net NPA ratio of the bank came at ~1.27% as on March 31, 2024 in comparison to ~1.32% in the last quarter.
Retail Credit for the bank went up by ~11.68 % as housing loan was at ~10.81 % and Vehicle loan was at ~14.03%. Agriculture & Allied saw an increase of ~18.69% with Portfolio amount of INR 2,53,206 crore.
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