India Bank Earnings: HDFC Bank Q2 2013 jumps 30% on year

HDFC Bank Net Income jumped INR 420 crores to INR 1982 crores after a bigger jump to 1560 crores in the year ago September quarter, NII was a healthy INR 44.73 Bln, provisions reducing to less than 4 Bln down 20% and Gross NPAs seemingly under control at 1.1%

CAR is down at 14.6% hopefully as the bank put more capital to lending from a linked quarter low of 15.5%. The NII is a 1% higher over June 2013 to INR 44.7 Bln and the NIMs have stayed at 4.3% over the 4.6% score in June 2013.

Nothing else would have changed in the bank strategy implying a steady 20% plus growth in credit but for the economy scraping the roads on its last legs(wheels) and HDFC Bank gets under the flak /slag button the bank earnings game show (much deserved for skewing and shilling the India growth equation)

They had improved growth in the retail book by 25% in the June quarter  and 15% in the corporate book. The Corp book has very recently returned into growth again after MSF rates were cut and TCS posted a cycling 23% growth in quarterly arnings after a bad Q2, i’ll let you decide if that is worth taking banks out of the Page 1 as we scrape legacy for 5% of the Global outsourcing market in TCS and Cognisant.(and Infosys)

Consumption data aside, rural inflation is still under 10% and though one can imagine the editorial changing perhaps claiming to a new generation ( that appears for CAT within a month), ducking HDFC Bank ‘s sterling results under the TCS performance was probably more than just a journalistic travesty. HDFC Bank performance was a good showing esp as Derivatives volumes has clipped up to INR 5 Bln in volumes and securitisaion though much maligned can relaly spread liqudity around. The Bank showcased a  bottom of the  cycle 16% retail in growth even as NBFCs like Bajaj Finserv and Bajaj Finance jumped lending and bottomlines like any other growth quarter , ensuring the success of festive season this month and next with the big Deepavali celebrations and then the roll into Christmas and New Year with school holidays.

HDFC Bank may have lost cosmopolitan markets but has not lost its magic and keeps the 30% bottomline growth faith within a reasonable band because of its power of distribution keeping the primacy of retail in the bank at 53% share even as Corporate and Institutional Bank steps up to the plate. Going further into the 20s it would not hurt the bank to get an existence outside ‘branch banking’

Bank Earnings India: YES Bank expected to grow to required size (Q3 FY2013)

Organic growth component of the bank’s strategy has shaped up well and even the despondent NIMs shaping up into a firm 3% mark this quarter as the bank ramps up on savings and Tier I Capital thru QIPs. The bank’s loan book probably increased Corporate exposure vis-a-vis its Agri book and the Provisions have thence grown by more than twice as required at INR 0.56 Bln but the bank has brought down Gross NPAs to 0.30% of the book and net NPAs even lower.

The bank states in the earnings conference that any rate cuts will accrue to NIMs CASA is nearly 20% growing from 17.3% to 18.3% and NII is well above average even for a mid sized companies at INR 5.63 Bln and Net income at INR 3.42 bln. for a book of a target possibly closer to INR 60 bln for the bank the growth in NIM is probably stating that the bank is about to hit the big league as is obvious from is well-rounded scores in management and corporate responsibility though its early single line focus still makes it an outsider in Corp loan syndicates.

Bajaj Auto results are on the wire.

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

 

 

 

Bank results Season: An excess provision for a working weekend SBI Q1 2012

Investors are fickle. After a $5 mln PAT performance to welcome the new Chairman Pratip Chaudhuri,

Please visit http://india.advantages.us and nod to the author..

SBI has actually grown to $395 mln quarter on quarter in Net Profits. Consolidated Net profits have even grown to more than $625 mln but the earnings report was pushed to the weekend and most reports and Friday trading did not seem to be expecting this much profit, concentrating on the year on year fall from INR 33 bln to INR25 bln this year this quarter. The 46% drop in focus is a misnomer as Pension Liabilities and Loan Loss provisions policy has already been updated in Q4 2011 and with INR7.5 bln in provisions just for pension liabilities to continue till December 2011, the rest is easily expressed by the Loan Loss provisions SBI never made in the earlier years before the accepting of the modified RBI policy in Q4

Of note however is the increase in bad loans, Gross NPAs rising to 3.52% for the bank a full point ahead of ICICI Bank which is also 33% in Assets with SBI holding a book of INR 7.9 tln in advances, a GROWTH OF INR 1.6 TLN or 70% of ICICI Bank’s Advances. A Bloomberg (Bloom’bg) list puts the public sector behemoth at #69 in the World’s biggest lenders and probably in the Top 10 in Corporate Loans gone bad. Since Calendar 2010 SBI has stepped up its rates 11 times, using its NIM cushion to proportionately reward short term deposits in retail and catch up with Money market yields. Industry wide 45 day deposits are 33% lower yielding at near 4% while the MSR in the inter bank market has moved to 9.25%

Industry expected banks to put up more fee income on the table to catch up with revenue losses but SBI stuck to the tried and tested with a 35% jump in revenues to INR390 bln Net Income for the Quarter nearly $10 bln for a single quarter from INR 300 bln in the year ago quarter. Toplines at most banks dropped or grew modestly. RBI has agreed publicly also that the high interest rate scenario engenders a disproportionately higher risk of bad loans but the interest rate hikes have moe to come as commodities have not settled down yet to being down the inflation to a stable rate

Despite the low Tier I core Capital at 7.6%, the bank has not been able to set up a proposal to encourage the GOI to invest upto its mandated 55% in a rights issue or the bank.. Meanwhile the bank is raising International Capital. SBI’s NIM shot up to 3.89% in Domestic Advances and 3.62% overall from a 3.33% Domestic and 3.16% overall in the preceding March quarter ( almost 106 bps above ICICI Bank) Interest Income on Advances in fact grew 36% but investors are likely to be slow to heed the same on Monday as markets continue their xit spiral, Portfolio investment exiting the country as opportunities run out in the widely acknowledged fairly priced/overvalued market in Asia The growth in Advances was a health 18.73% just above the Industry growth rate of 18% while the PLR increases of 185 bps year on year made up for the extraordinary rise. However QOQ incrreases interest Income also up 12% with Advances growing from March by 2.x% NII is up more than 20% sequentially

Staff xpenses remain the most part of Operating expense increases as a Wage revision is charged continually. The counter cyclical provisions esp for contingencies ( black swan events) are another Rs 550 crores or INR 5.5 bln. Advances to Large Corporates stand at INR 1.15 tln for the bank and the Retail book is INR 1.65 tln SME, Agri and International Advances are a Trillion each too. The Banks NII is up to INR 97 bln or $2,5 bln up from INR 81 bln in the March quarter nearly 25% QoQ from $2 bln

Icici Bank, Festival of South Asia, Toronto
Image by Ian Muttoo via Flickr

India Earnings Season: Axis steals the thunder in Q1, will Q4 be pathetic again?

ICICI Bank Headquarters, BKC
Image via Wikipedia

To be fair, credit growth has been exceptionally rosy for aggressive players and those with the capacity for raising more profitable RWA should in fact be put to task by the markets in this quarter from among the banks, we have alrdy traced DCB, ING and contrasted with Indusind a nd HDFC. Now we observe the biggies in action as ICICI Bank comes out with Q1 results and HDFC Bank’s score seems a tough enough ask to verify whether performance is intermnal to the company or a fabrication of circumstances for a nearly public sector monolith.

Axis in the mean time paid 200 bps higher on term deposits to shricnk the NIM to 3.28%. Themanagement feels it likely that they will manage NIMs between 3.25% to 3.5% On their overall loan book of $33 bln or Rs 1.32 Tln, the bank has earned Rs 1730 crs in net income or $432 mln. At a CASA of 40% deposits are up to Rs 1.84 tln or $46bln and CD Ratio thus just above 75% fairly safe for the overall book

NPAs were pretty big however at 1.06% showing improvement but no where near ideal, the bane of its public sector history with weak controls and may be even corruption as prevalent in the industry sector. At Basel I Cap Adequacy of 12.53% the bank is barely ewell priovided for the traditional model esp as its NPA folio despite 50% lower provisions of Rs 175 crores, is still a near $350 mln at Rs 1500 crores

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