Bank Results season: SBI highlights NPA to 2.2% and Provisions of INR 8.9B

 

Gross NPAs for Q1 FY 2013 increased to 4.99% instead of estimated 4.7% and Net NPAs rose almost 20% to 2.2% from June 2011 in the just announced results the bank increasing provisions. Gross NPAs amount to INR74.9B and Provision Coverage for the Giant despite increasing are still much lower than the competitionand smaller public banks at below 65%

NII is just 111B, 5-8 B less than the street estimate and total provisions this quarter are lower at INR 24.6 B taking the bank to below 1900 in trades after the ires ran the shock up the market spine. Broader markets may survive this loss of confidence in the public sector as the market demands of removal of subsidies as part of deep seated reform also subside without the indices rerating below a 5200 bottom

More details as the bank management releases further details of their private massacre when the street expected that the income and loan related pown rovisioning had been completed by the bank in a surgical action last March and June and profits are expected to increase 128% but will still manage to outgrow a INR 25 B mark satisfying the requirement of a viable net margin with interest spreads under pressure

Deposits have grown to INR 11 T while the bank claims a revised CAR of 13+% as of June 30 while Total Net Income is 14.6B or less than $3 B th no growth in fees advisory and other income

Q4 NPAs were best in class at 1.02% doublling sequentially ( Net NPAs)

 

Deposits have grown to INR 11 T while the bank claims a revised CAR of 13+% as of June 30 while Total Net Income is 14.6B or less than $3 B th no growth in fees advisory and other income

Q4 NPAs were best in class at 1.02% doublling sequentially ( Net NPAs) Net Margins have infact improved as the bank manages a PAT of INR 37.5 B but we have derated the stock as it has shown an inefficiency in shooting NPAs and continuing pressures in sectors like Aviationa nd textiles apart from the industry wide press ure from Power, infracos and construction & Telcos which private banks have tyurned to their advantage.

 

India Earnings Season: (Bank Results Season) Axis reports NII jump to INR 21.80 B

 

Axis Bank Dream Home Festival 18th & 19th Marc...
Axis Bank Dream Home Festival 18th & 19th March 2012 at Hotel Pride, University Road, ShivajiNagar, Pune 411 005 – 2 (Photo credit: Ravi Karandeekar)

 

Axis tried to drown itself on results to break the jinxed 5200 levels but the results brought in more buying as the Topline jumped the usual 20% + on year and Net profits have held sequentially as well as on June 11. Net Interest Income is up almost 30% at INR 21.8B Net income is up 22% on the year. Gross NPAs are 1,06% , no further improvement but despite the school of hard knocks the bank comes from that is a best in class performance from the bank incl the CAR of 13% and Net NPAs are 0.31%

Net profit beat expectations. Net NPAs are 6 B from 4.73 B in March and was expected. Provisions have grown on a low base and INR 2.59 B is not the end of story and ill rise in future quarters even before Dynamic provisioning is sneaked in

The Loan portfolio is up to INR 1.7 T and that’s creditable 30% growth over June 2011 while retail portfolio has started ticking up its share after the bank’s thrust in cards and unsecured loans to INR40B or 24% of the portfolio. Both ICICIBanka nd orking Capital Experts HDFCBAnk have 50% of their assets in retail.

I am recommending buy before close of market hours today and adding to existing ICICIBANK and HDFCBANK portfolios. SBI may be sold on results as well

 

 

 

A lasting short covering rally as the rupee rises – India Morning report – The Monday Morning Pre Market Report

India’s Financing continues to catch up with global coprorations ith three Indian banks accessing the Dim Sum bonds market this year to raise CNY 2B or $300 mln including a small taste maker bet from ICICI to take advantage of the 0.5% lower costs even for Indian companies.

Fixed market yields are range bound and Domestic credit has also picked up with the stock of Cheap ECB credit despite depreciation at $40B. Also rupee is likely to follow the downfall in the Dollar indices to some extent as the Eurozone gets ready to fund EUR 100B to Spanish Banks as requested on the weekend by Spanish FM De Guindos.

Domestic credit growth is of couse still 14% levels after the jump in the last week of March and has a long way to go with NBFC exposures pared. The stock of bad loans is expected to grow from the current 2.3% albeit at a very small pace and unfortunately, because the rate cut is not coming and the market is still hoping it will follow after global easing moves in May, I exited prematurely at great losses on the 5000 and the 5100 Condors/Straddles at the 2 pm see-saw in the market on Friday. The FII strategy of buying futures with 5000 puts remains safe, most can not necessarily bother with buying any puts as the market look unlikely to turnaround before 5150. Banks are good long term investments but before the weekend policy announcement the markets are likely to lean towards there won’t be a rate cut or accentuate the massacre on Monday

Demand from China has picked up including imports of Copper up 65% Y/Y which include a genuine pick up in demand as it was planned for long time. 200,000 tonnes of stock were reduced in Shanghai in Feb 2012 and any physical transfers at LME prices to Shanghai may not explain the complete pick up in demand leaving Copper happier from current los. India does export most of its stock ( not refined copper) to Shanghai,, so it should have more cause to cheer. The gap in Shanghai and LME prices continues to be more than $1000 a tonne and Oil prices keep falling even as Dollar now is a week into its roller coaster down leg with or without more QE from the Fed

 

India vs China : ( A likes comparison) Chinese inflation ticks down to 3.4%

 

China Premier Wen Jiabao deliver the Report on...
China Premier Wen Jiabao deliver the Report on the Work of the Government at the Third Session of the Eleventh National People’s Congress on March 5, 2010 (Photo credit: Wikipedia)

 

While Indian inflation is likely to step out of the sub 7% mark on the wholesale levels to more than 8% following the retail index, Chinese inflation ticked up to 3.4% leading to a reaction in the morning’s Asian opening. Chinese imports were up only 3% like for India at $37.9 bln with not just Oil but in India’s case two thirds of the Diamonds and Gems trade shutdown and Gold and Silver imports are down by a third from a government increase in import duties. The tradedeficit thus comes to below $160 bln at the cost of over $100 bln in Exports according to the trends explained by the Govt official,  after the first month of the Fiscal at Data release yesterday

Chinese inflation easing further may not be a good thing as it also follows a drastic fall in demand consumption, the bulwark china is relying on to stimulate growth though outgoing Premier Wen Jiabao has been vocal in the last few months against the culture of imported consumption items in China. We felt more comfortable for China at the 3.6% mark for inflation in March as it was within the 4% mark and Banks though restricted by opportunity on Lending had still managed healthy Q1 profits

Asian Economies of India and China’s leadership in growth is a required element for the continued recovery in Western markets and limiting of European troubles though European trade continues to favor banana policies and non South Asian economies for trade and investment hopes. India on the other hand reported new FDI of $ 8 bln in March but the Exxport slowdown and the increasing inflation from the 21% depreciation in the Rupee  int he last six months will hurt growth and consumption with Automobiles sales in April already down to 4% growth or 235,000 units for April including Exports. Ford, Nissan and others would be increasing exports from the added capacity in their indian plants from this year

India is hoping to get a further $1 Tln in Infrastructure funding from private funds to quasi SWF structures sponsored by banks and government

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