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: A critical look at PSU Bank results >> Dena, Karnataka, PNB and BOB


The sector reported in unison on Friday and bad debts rose to an average of 3-4% at most banks that reported. However, first the two profitable ones that improved results, then prioritising the big ones BOB and PNB that have sizable profitability and asset advantages and then the rash of CBI, UBI and others. Global Capex slowdown will continue to affect the INR 6T in Power sector Loans (2010) which have already come to INR 4Tln in 2011 and are likely going downanother 25%

Uma Maheshwari and Nutan of CRISIL/S&P had a ok denoument of their cry wolf and as MOS suggested this could well be the last reported increases in NPLs but then I don’t know what MOS is saying right now.

Dena Bank

Dena Bank reported an NII of INR 612.24 Crs or INR 6.12 B, comparable to some of our food majors like Jubilant Foods (QSR) who reported INR 3.14 B selling pies in the same. Other income was characteristically subdued even at this profitable Mumbai based regional PSE at INR 1.41B

Jubilant’s net Profit margin was just 10% as Dunkin’ Donuts weighed in though the Pizza brand has 489 stores of its own. Dena’s operating profits of INR 4.57B or 60% and Net of INR 2.39 B or 31% underline the stable underlying growth in even public sector units though the preponderence of these inefficient beachheads of government donated welfare and 60s nationalisation dominating the Bank Nifty may still not be defensible

This bank counts 1% Net NPAs and 1.8% Gross NPAs. It counts 80% of its income from Treasury and Corporate thoughin this case Treasury independently contributes 28% of that combined income and a slightly better proportion in profits

The Bank has 0.91 Tln or 45% the size of an ICICI Bank. EPS 6.82 down yoy

Karnataka Bank

KTKBANK reported just INR2.26 B in Net Interest income and INR 0.91 B Other Income and a Net Profit of INR 0.83 Bln or 83 Crores on an asset book of 317B (FY2011)   Net NPAs even at the profitable unit are already 2% and Gross NPAs 3.31%

Treasury and Corporate (Lending and Bills) equally split the non retail business of 67%

EPS of 4.43 up sequentially from 4.42 and up 67% yoy

The Bank counts deposits of INR275B and Advances of 175 B last available for March 2011 The bank’s private sector advances do not count agricultural loans. Total Assets of INR 317B would be assumed to have grown only in single digits

Punjab National Bank

Gross NPAs are just INR 99.72B and Net NPAs INR 49B but 3.38% of gross and 1.68% of Net respectively. The bank has guided final NIMs of 3.5% so does not expect mrore than the mandated increase in provisions from here and recovery income is honeycoating the pot

Profits grew hardly in double digits below 15% for the megalith with INR 2.66Tln in non food loan assets that beats ICICI in loan assets by 20% and INR 6.7T in  “business mix” or balance sheet assets with Deposits of INR3.85 T and Loan assets of INR 4.59T, Credit and assets having grown 20%

NII is up a shade under 20% at INR3.7B and Other Income stable at INR1.2B, Net Profits growing 12% to INR1.25B Provisions grew from INR566Crs to INR900 Crores or INR16B incl Tax assets

Fee based Income is INR 549 Crores or 5.49 B and Net Interest margin despite a dip continues at 3.7%  ahead of all others the drop in NIMs having hit the third consequent quarter, still supersized from other competitors , the best NIMs being near 3.5% The Cost of funds for the bank is below 6% and Credit Deposit Ratio 77% to 76.4% in the current quarter. CASA is non standard at 35%

The banks retail assets are barely 10% of its loan portfolio, Power and Telco 8 and 2.6% an dthe bank holds INR 1.2T in investments This quarter’s restructured assets are just 5% of its total INR255B

The bank should hurt those going short at current levels

Bank of Baroda

Reported results today NIMs are don from 2.96% to 2.73% Restructured assets have however added only INR573 Crs or INR5.73B NII of INR27.98 B reasserts it is the top of the heap with PNB

BOB restruured assets have added INR7.5 B not in power and telco but in Textiles


IOB NPAs are up to 2.97% at the fag end of the results day. Allahabad Bank NII has gone up 12% to INR 13.7B.  IOB NII is 13.28B but provisions of INR5.2B may still be low with Gross NPAs half that of Canara and Union Bank at 44 Bln Allahabad Bank PaT is INR5.27 B and OBC at INR 3.94 Bln among others today


Bank Results season: What’s so great about HDFC Bank(Q3 2012)?

Headline results at Gross NPAs up to INR 22.02 bln from below 20 bln last quarter and a NIM of 4.1% with Gross NPAs down to 1.03% vs 1.11%

December 2011 gross income topline has come to INR 86.22 bln or 7.5% up on quarter. September 2011 had grown income to $1.6 bln by Indian GAAP or nearly INR 79.5 bln up 37% from September 2010 despite the bad credit conditions that actually meant INR 30 bln in NII and INR 12 bln in Other income ( Fee  and non interest income) at 4.1%.

October saw a marginal pullback in credit figures as well NII growth should be closer to 20% as the bank has grown assets in the new quarter and NIM is good at 4.1% As I expected, Cost income ratio has come down from 48.7% with Loan income at two thirds, of the total topline, branch costs should be controlled to lower 40% levels

Net interest income at INR 31.16 bln and Other income at INR 14.20 bln are also thus higher on September but NII has a yoy growth of 12% down from 16% in September  YOY growth in total income (Indian GAAP) and profits is nearly 35%

Net Profits increased to INR 14.29 bln up 19% on quarter reflecting the seasonal growth in October, year on year growth close to 40% while growing Provision Coverage Ratio to 80% against the required 56% improving Cost Income to 46.7% despite 420 new branches from last year December and 340 were new cities in the bank’s distribution network. ATMs grew from 5000 to 7110.

Deposit growth of 21% on the year despite a CASA of 47.7% and interest rates having plateaued at a peak of around 9.5% and 11% (less than 1 year lending) CASA deposits are now INR 700 bln maintaining the Sept 30 figure of INR 690 bln. Tier I ratio is 11.2% before 3Q profits CASA and other deposits had grown 6.5% and 13% from the June quarter and have not gone down since

Provisions are lower by 50% at INR 3.29 bln Retail is 51% of the book and wholesale 49% with retail loans having grown in the latest quarter at 29% yoy against 15% in wholesale as the bank shuts down ipon its short and medium term lending to reduce risk

Bank Results Season: HDFC Bank showcases awesome retail growth

An HDFC Bank Branch in Hyderabad
Image via Wikipedia

With deposits increasing 9% over the June quarter and Savings accounts increasing 6% year n year of the total 18% growth in Deposits, HDFC Bank did well to run in to September end with a NIM of 4.1%. Advances have grown by 25% from September 2010, for Balance sheet size increase of 20% based on retail loans growth of 30%

The Bank has proved again that efficient management can still help it scale its mature management model as Net NPAs remained a low 0.2% of its Net Advances. and Capital Adequacy also remained at 16% and 11.5% for overall and Tier I based on the current Basel norms in India. India’ s breed of banks continue to grow on equity infusions than a hankering for Tier II capital and thus the bank sizes are inherently not comparable in size to those in China and the USA.

The bank increased PAT to a humongous INR 12 bln ( INR 1199 crores ) or $240 mln for a $1 bln runrate in FY2012 total Balance Sheet assets now exceed INR 3 Tln against INR 8 Tln for SBI and INR 2.5 Tln for ICICI Bank

Advances rose to Rs 189,917 crores or $38 bln and deposits outgrew past the $40 bln watermark More details would be apparent in our series after ICICI Bank results come out at the end of the month and HDFC bank results presentation is formally created/shared for the bank

Advances rose to Rs 189,917 crores or $38 bln and deposits outgrew past the $40 bln watermark Fee income was higher by 15% over 2010, at INR 983 crs comparing well with Q1’s 1100 crores. The year on year growth in Topline is the same as for Q1 and profits are up nearly 4% from June Other Income also grew more than 8% as Deposits grew 9% from June 2011 keeping the CASA healthy at 47.1% ( CASA had reached 49% last year)

Net Interest Income rose above expectations to cross INR 3000 crores rising less than 10% QOQ from June 2011 Loan provisions were 393 crores or $78 mln a mere 12% of the NII and the Cost Income Ratio was less than 49%

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 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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