Your favourite bank did start showing hidden wrinkles as it eagerly snapped up a 26 bp NIM increase to 3.26% this quarter an Net interest income grew in line with the bank’s voracious appetite to INR 38.88 Bln. The retail surge which slowed down to 20% and Deposit growth continues without buyouts of deposits at the industry rate of 14%. That means the retail team is unlikely to prove other results without the earlier snafus with retail processes even as it opened 250 new branches, 150 in the unbanked regions. The chink in the armor is that the bank will smooth over its increasing gross NPAs as the continuing expansion in margins gets the bank to override and lay down the news of a jump in gross and net NPAs. Gross NPAs for a large bank as such are horribly disavowable at 3.23% and Net NPAs are also thrice the rate at equally sized HDFC Bank.
The stresses however may not be l
inked to its growth as one looks askance at the 15% plus ROE. At this moment however I am unable to more than cast a doubt on the Capital Structure for such ROEs and the same however is not to be confused with the global banks which still have a entirely different Order of magnitude of liquidity and derivative profits/risk management. It might still have an audience requesting that they be treated as peers especially on the comments on Capital Structure while structured product profits would still seem unseemly. The results will probably bring the bank under fire from its Indian peers , starting here at the ROE growth which seems awkwardly as always one step ahead o f the coming high interest rate regime when it actually expands margins.
Profits are only up 25% less than the expected INR 24-25 Bln mark at INR 22.54 Bln
The Active CaSA strategy for the bank seems to have worked wonders again with another 1.95 increase quarter on quarter to more than 43%. From here CASA would go on reducing once it reaches 47-49% levels in three-four quarters(at this pace). Average CASA as been reported duly at 39% , ad the gap is showing , which may be a disconcerting note for investors as the surge in retail and commercial deposits continues to bank the margin till rates are hiked.
However to reiterate, The Bank thus now has been completely clean on the paper trail in terms of its profit, asset growth and retail loan growth objectives , also fulfilling its rural objectives , covering the unbanked and continuing to improve its show while the fissures in its wholesale international book and the growth in retail NPAs coming hither will well be masked in the current reporting as well, leaving it another show of increased transparency The bank has however totally dominated its peer HDFC Bank in the banking sweepstakes for the two universal banks heralded in India at the first stage of bank reforms in 1995.
- India’s ICICI Bank Q1 net up 25 pct, meets forecast (xe.com)
- Nursing rupee, India likely to keep rates unchanged (xe.com)
- India Earnings Season: Bank Results scared by the Rate/fx tuple (HDFC Bank Q1 FY 2014) (awardz.wordpress.com)
- Bank Results season (India Earnings) : Yes Bank starts back from 390 levels despite overnight straits (awardz.wordpress.com)
- India banks: Annual Report analysis Source: IRIS (13-JUN-13) (priyensavla.wordpress.com)
- India’s HDFC Bank Q1 net profit up 30 pct, bad loans rise (uk.reuters.com)
- ICICI launches online remittance account (news.in.msn.com)
- India Morning Report: YES, ING Results follow up and rural consumption (awardz.wordpress.com)
- India Morning Report: Banks earnings, GDP scares markets despite inflows (awardz.wordpress.com)
- India Bank Earnings: HDFC Bank Q2 2013 jumps 30% on year (awardz.wordpress.com)