Public sector bank (PSB) stocks surged up to 10% on the National Stock Exchange (NSE) in Monday’s intra-day trade after select banks reported a strong set of numbers for the quarter ended December 2021 (Q3 FY22).

At 1.15 pm, State Bank of India (SBI), Union Bank of India, Bank of India, Bank of Baroda, Punjab National Bank (PNB) and Indian Bank traded over 2% higher on the NSE in an otherwise low market.

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The Nifty PSU Bank index hit an over two-year high at 3,133.50 in intra-day trades today. The index broke the previous record of 3,100.15 hit on July 19, 2019. The Nifty PSU Bank index was up 2.43% against a 1.1% decline in the Nifty50 index.

Among individual bank stocks, SBI hit a record high at Rs 549 and had gained 3.5% in intra-day trade after the country’s largest bank reported a 62.3% year-on-year (YoY) rise in net profit at Rs 8,432 crore in Q3 FY22 on growth in interest margins. This is the highest quarterly net profit reported by a bank.

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The lender’s net interest income (NII) increased by 6.48% YoY in Q3 FY22 to Rs 30,687 crore from Rs 28,820 crore in the corresponding quarter last year. The domestic net interest margin stood at 3.40% in Q3 FY22, up by six basis points YoY. It declined by 10 basis points from 3.50% in Q2 FY22.

Asset quality improved with gross non-performing assets (NPAs) declining to 4.5% in December 2021 from 4.77% in the year-ago period and 4.9% in the previous quarter. Net NPAs were higher at 1.34% in December 2021 as compared to 1.23% in December 2020 and 1.52% in September 2021.

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ICICI Securities maintain a ‘buy’ rating on the SBI stock with a revised target price of Rs 630 per share.

Bank of Baroda (BoB) shares jumped 10% to Rs 117.20 in intra-day trade as its net profit increased two times to Rs 2,197 crore in Q3 FY22, due to higher net interest income and lower provisions. The bank had reported a net profit of Rs 1,061 crore in the corresponding quarter previous year.

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Net interest income (NII) rose 14.38% to Rs 8,552 crore in the reporting quarter, helped by margins. NIM of the lender stood at 3.13%, up 36 basis points from the year-ago period.

BoB’s asset quality improved both sequentially and on a YoY basis, with gross NPAs at 7.25%. Similarly, net NPAs improved to 2.25% in Q3 FY22. Slippages stood at Rs 2,830 crore as compared to Rs 5,223 crore during Q2 FY22 and Rs 3,986 crore in Q3 FY21.

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Motilal Oswal Financial Services said BoB reported commendable earnings led by a strong recovery in NII and lower provisions even as lower treasury gains impacted other income. The brokerage maintained a ‘buy’ rating on BoB shares, with a target price of Rs 150 apiece.