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Explainer: How've banks performed so far in 2022?

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Explainer: How've banks performed so far in 2022?

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Crude oil continues to rise; it’s at USD 110 per barrel, so this may impact the government's near term ability to infuse money in the infra sector, which they have been doing in terms of capex. This in turn can impact the GDP growth rate and that can take a reverse hit on the loan growth of the banking sector.

Crude oil continues to rise; it’s at USD 110 per barrel, so this may impact the government's near term ability to infuse money in the infra sector, which they have been doing in terms of capex. This in turn can impact the GDP growth rate and that can take a reverse hit on the loan growth of the banking sector. So, there is a correlation between GDP growth rates to banking sectors’ loan growth.

The decline in Bank Nifty is largely led by the largecaps like HDFC Bank, ICICI Bank and Kotak Mahindra Bank.
Talking about large private banks, they have underperformed Nifty and Bank Nifty in year-to-date (YTD) 2022; so far year-to-date Nifty is down about 4.5 percent while Bank Nifty is down about 0.9 percent.
On the other hand, PSU banks are outperforming; growth in terms of the stock price is about 26.2 percent for Bank of Baroda. Canara Bank is up about 8 percent, SBI is also up close to 2.9-3 percent level. Mid and small banks have also outperformed this year after underperformance is seen in 2021 owing to the stress in their balance sheet. So, the likes of Bandhan Bank being up more than 18 percent, Federal Bank up more than 15 percent and AU Small Finance Bank also up close to 14 percent.
Watch the accompanying video of CNBC-TV18’s Abhishek Kothari for more details.
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