BofA Merrill upgrades PSU banks on rate cut, loan recoveries

Bank of America Merrill Lynch upgraded State Bank of India, Bank of Baroda , and Oriental Bank of Commerce to 'buy'.

The investment bank said upgrades come on the back of a steepening bond yield curve in the anticipation of RBI rate cuts, stronger-than-expected loan recoveries, and reduced quality pressures.

[caption id="attachment_581020" align="alignleft" width="380"] Reuters[/caption]

BofA Merrill also upgraded its price objectives for private banks, retaining ICICI Bank as its top pick, and HDFC Bank and Axis Bank as its "preferred" names. All three banks have 'buy' ratings.

"Private banks will likely continue to deliver structurally superior earnings and RoEs, especially over the medium term," BofA Merrill said in a note dated Tuesday.

More from Fwire

Reuters