Union Bank, UTI Bank and HDFC Bank have the topped the list of banks that gave impressive returns to investors in 2004-05, according to a study by an industry chamber Assocham.
The Assocham Eco Pulse study of top ten banking stocks, however, found that overall returns in the sector nosedived to 29 per cent in 2004-05 from as high as 146 per cent in the previous year despite rise in retail loans and credit offtake.
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Top 10 banking stocks | |
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1 |
Union Bank |
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2 |
UTI Bank |
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3 |
HDFC Bank |
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4 |
ICICI Bank |
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5 |
Corporation Bank |
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6 |
State Bank of India |
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7 |
Punjab National Bank |
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8 |
Canara Bank |
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9 |
Oriental Bank of Commerce |
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10 |
Bank of Baroda |
Union Bank, which was ranked sixth in 2003-04, rallied to emerge numero uno in 2004-05 since its returns to investors more than doubled, the study said.
However, in the case of UTI Bank, though it ranks second in 2004-05 with returns to investors rising by 62 per cent, it had given as high as 294 per cent in 2003-04.
Although third in the ranking, HDFC Bank -- which had given 63 per cent returns to the investors in 2003-04 -- could offer only 45 per cent in the last fiscal.
Despite a surge in retail loans and credit offtake last year, banks only managed to increase profits by over one per cent, it said adding for much of the last year, firm interest rates drove down other incomes by 6.5 per cent.
Oriental Bank of Commerce, which was the best performer with an impressive 390 per cent returns in 2003-04, slipped to ninth position with four per cent returns in 2004-05, it said.
Punjab National Bank, which gave 240 per cent returns to investors in 2003-04, slipped to seventh slot as it could offer only 19 per cent returns in 2004-05.
Likewise State Bank of India has also gone down in its ranking with its return dipping to 11 per cent in 2004-05 from as high as 128 per cent in the previous year.
In the case of Canara Bank, returns to investors fell to 43 per cent in 2004-05 from 113 per cent in 2003-04.
Private sector ICICI Bank gave its investors returns of 36 per cent in 2004-05 against 132 per cent in 2003-04 and Corporation Bank also gave 36 per cent (122 per cent).
The worst performer amongst the top 10, according to the study, was Bank of Baroda with its returns to investors dipping into the negative territory of five per cent in 200-05 from as high as 196 per cent in 2003-04.
The study found that in May 2004, stock market declined sharply following the policy uncertainty regarding divestment, bank privatisation and fiscal consolidation efforts, which led to a huge negative returns of over 26 per cent in the banking stocks.
"The hike in FDI in private banks to 74 per cent is a positive development for the sector, which will certainly lead to increase in capital and also induce banks to improve their efficiency to be more competitive," it said.
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