PSU Bank Stocks Plunge After Disappointing Quarterly Updates: Union Bank Leads the Decline

On January 6, Indian Public Sector Undertaking (PSU) banking stocks faced a sharp sell-off as disappointing quarterly updates from state-owned lenders failed to inspire investor confidence. This resulted in a notable decline across all major PSU bank stocks, with Union Bank of India being the biggest loser.

The Nifty PSU Bank index slumped by 4.30%, reaching a six-week low of 6,334. All 12 banks in the index closed in the red, with Union Bank of India seeing the steepest fall, dropping 8%. Other banks including Bank of Baroda, Bank of Maharashtra, Bank of India, Indian Overseas Bank, Punjab National Bank, UCO Bank, Canara Bank, and Central Bank of India also saw losses ranging between 4% and 6%. This marks the biggest intraday drop for the Nifty PSU Bank index since June 4, 2024, when it fell by 15.14%.

Union Bank’s Disappointing Update
Among the state-owned lenders, Union Bank’s December quarter business updates were the weakest. The bank reported a modest 3.8% year-on-year growth in deposits, reaching ₹12.16 lakh crore, while advances grew by 5.9% to ₹9.49 lakh crore. Sequentially, deposits saw a decline of 2%, while advances rose by just 2.1%. This underperformance put pressure on investor sentiment, further exacerbating the drop in PSU bank stocks.

Other PSU Banks Show Mixed Performance
In contrast, other PSU banks posted more robust figures in their business updates for Q3 FY25:

  • Bank of Baroda reported an impressive 9.23% growth in domestic deposits and an 11.82% increase in global deposits, reaching ₹13.92 lakh crore. Its advances also saw a solid 11.76% growth in domestic advances and an 11.65% rise in global advances.
  • UCO Bank witnessed a strong 16.20% year-on-year growth in total advances, driven by a significant 18.83% increase in domestic advances. Deposits grew by 9.37%, reaching ₹2.80 lakh crore.
  • Bank of India posted double-digit growth in both deposits and advances. Its gross advances grew by 15.31% year-on-year to ₹6.51 lakh crore, while total deposits increased by 12.29% to ₹7.94 lakh crore.

Outlook
Despite the weaker performance from Union Bank, the other PSU banks displayed positive growth in both deposits and advances, suggesting that the sector may still have potential for recovery. However, the sharp fall in the Nifty PSU Bank index today reflects the market’s cautious outlook in the face of mixed quarterly results from state-owned lenders.

Disclaimer: The views and recommendations above are those of individual analysts, experts, and broking companies, not of us.

Related Articles