Bank Results season: Its not the asset quality trails but the change in NiMs

Banks across the board got a full reprieve in Q1 (Fy 2014) as they report much better NIMs, ING improving to 3.56% up almost 10% from previous year scores because of the lower interest rates by the Central Bank. Apart from the old hat CEntral bank rebuttal to banks at this stage for refusing to  pss along the rate cuts, this strategy is not really creating any abnormal returns but would have unsqueezed banks bt for the oil triage getting the Economy back into a high rate orbit.

Also the concerns about asset quality are probably unfounded as they just try to close up books on all doubtful assets and this quarter’s anomalous jump of 50% at HDFC Bank and more at ING vysya is likely just a result of that

Retail Banks have obviously been running higher NIMS like 4.4% at HDfc bank and cllose to 4% at Axis, but they also hide a lot of retail pain in their bigger balance sheets that can be shown by segmenting the cost of funding also appropriately for the retail book

 

India Morning Report July 18, 2012: O if only Pranab Da was the Sensex!

Reproduced from yesterday’s morning report – sanitised and debugged

English: Source: http://georgewbush-whitehouse...
English: Source: http://georgewbush-whitehouse.archives.gov/news/releases/2008/03/images/20080324-6_d-0665-2-515h.html President George W. Bush meets with India’s Minister of External Affairs Pranab Kumar Mukherjee. (Photo credit: Wikipedia)

Mr Pranab Mukherjee can possibly land a 75% vote in the Presidential election later in the week as Mamata Bannerjee capitulates for a fellow Bengali. Early monsoon worries caused a big hole in the states of UP, Punjab, Maharashtra and even Rajasthan with more than 50% deficiency but Foodgrain production is already 257.44MT for the year ending June if government estimates are believed with Record production in Rice(104MT) , Wheat (93MT), cotton and sugarcane keeping prices down in the meantime. this last estimate has been revised upward by 5MT from April.

However Nifty’s rangebound worries have initiated more correction calls and already stopped out some shorts at 5200 where it lies in wait, as the most undervalued emerging market and also as the fastest growing Coke market where Coke and Sprite both grew by more than 30% The MF reforms are going to come in with commissions restored but the usual halfway house on the bridge of expectations draws a line in the sand for what uptick you will get from further policy pronouncements. The macro Indian story has to celebrate but next year is going to see contraction in agri production with Sowing in crops down from 10-30%. Even in hot commodities like sugar and cotton, the downtick is there though just 2-4%(in sowing)

India is still 15 points ahead of China in the Nielsen consumer confidence. However IMF seems to have given it the thumbs down despite keeping growth estimates north of 6% with India’s Fisc targeting a number the same as Ireland and higher than Spain , vying for the 8.9% mark in 2012 behind Japan’s tsunami restructuring funding and not likely to improve in 2013 either , making mockery of india’s budget estimates brazenly, giving Moody’s and S&P fodder as they are set to evaluate the india rating in the next 8 weeks. Guar seed is the only commodity doing well though the shutting of the Straits of Hormuz mean Oil could march ahead again. India’s trade deficit data for June found Oil buying missing ahead of a probably ban on Gold imports to $10B from $16 B in the month of May

Bajaj Auto reports today and Hero Motocorp follows tomorrow while non discretionary consumer companies ares showing health in Sales and in marketing spends at 12.9% for Marico

Dr Reddys and HT Media report this week with JP Power closing out on the weekend with Q2 numbers. JP Infra is poised to report the Yamuna expy opening as well. Monday opens to expectations of good results from Colgate and HUL. TV18 also reports on Monday followed by the Pizza guys and Dominos franchise holder  Jubilant Foods on Wednesday when the IT saga unwinds with par for the course HCL Tech results

Smaller banks Karnataka Bank and Bank of Maharashtra report this week then ING, Canara, LIC Housing  and SBBJ set the stage for the big Yes BANK reports on Wednesday (24th). Kotak Mahindra Bank reports tomorrow.

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Moody’s makes India P-3

English: People entering the main temple.
Image via Wikipedia

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