India Earnings Season: Bank Results scared by the Rate/fx tuple (HDFC Bank Q1 FY 2014)

HDFC Bank 

HDFC Bank seems to have flashed a pretty good 26% NII on the wires for INR 44.4 Bln from loan spreads that remained a natty 4.6% in the quarter. The Loan book and Deposits have grown over and under 20% respectively to a book of INR 3 Tln each. The NII seems to be up 3% from the linked quarter in March. the bank’s NIM reporting was bumed up by new rules for apportioning of usual expenses employee pension liabilities and some commissions. Last quarter’s Fee income at iNR 1 Bln is likely static as profits came in at INR18.4 Bln adding to INR 18.8 Bln in April

The markets however do not seem to be rejoicing as the insurance FDI question is moot for the player with Standard Life and IPO plans both not firm for the bank. Yet, the markets continued sppoked by banks fixed income portfolios letting blood at the 100 bp move in yields from the 1 yr forward to 10 yr and at least at 8% + and rate cuts batted out of sight even before the FX scare by the Central Bank rushing into four such 25 bp cuts factored in barely 5 meets since March 2013

Recast loans are almost non extent as in Q1’s figure of INR 3 Bln and Non performing loans are as low as 0.3% of the book at less than INR  Bln from the wires

 

YES Bank on the wire?

YES Bank reports next week on Wednesday  and has been singled out for this rate move’s aftershock while

Indusind, when is it a good enough scale as competitor

Indusind reported a huge 50% jump in Net Interest Income at first glance from its new off take in retail lending finally trickling in . NII hit INR 6.80 Bln for the upstart and operating expenses moved up 5% over March at INR 5.08 Bln. Fee and Other Income was up 30% or nearly INR 1 Bln at INR 4.71Bln , Income before Tax rising 45% to INR 5 Bln over last year. Indusind has also brought down net NPAs to 0.2% and the gross NPAs at 1% of its rapidly growing INR 500 Bln book itself up 60% i the last 5 quarters. The ROA of the bank at 1.83% will be counted a s low for its still rudimentary book Bank reported NIMs of 3.72% on its retail book

India Morning Report: Value breakdown continues to reassign Nifty weights, banks in trouble

Of course Banknifty still has another 1000 points to go but the ramp down in PSU banks comes at a price for ICICI Bank and HDFC Bank specifically and PNB’s rise similarly would cost the markets more understanding for the non performing PSU Bank portfolio that will also rise, PNB having no real score on NPL performance either, clubbed with the worst of n=”government owned banks” whose non reporting of NPLs in time earlier costs the Bank capitalisation a good 10% on more than 5% of the Loan portfolio having to be put to waste immediately.

Delivery flight to Gander 737-700 Boeing Field...
Delivery flight to Gander 737-700 Boeing Field – Seattle, WA August 9, 2007 (Photo credit: Wikipedia)

Jubilant Foods has a short call on it finally even as Jet Airways continues its uptick and IDFC also corrects till policy execution calls die out or are converted by the government positing as always more on fare hikes which can be rolled back and diesel hikes that cannot be implemented from the looks of it. Add to that , traders and investors (foreign) would also like to see actual divestment in Hindustan Zinc and BALCO as Vedanta has already made a good offer for the residual stake and legal issues bogging down this government would not be easily tolerated. But then the spectrum discussions have already panned out for the government after the setbacks from the Judiciary almost a year ago.

A Jubilant Food, Titan and JP Associates move down could also signal today being the last day or the endgame of the correction as the weekend would likely be positive for the markets when they open on Monday. All in all a lazy Thursday and a reconnaissance up for markets on Friday tomorrow as they figure out any new costs of arbitrage on fundamentals as we remain part of a high interest rate economy in terms of market structure with growth concomitant with inflation and depth of market  ( as opposed to nascent high-speed growth in Indonesia, Thailand and even Pakistan) coming at the cost of lower available floating stock with only 3% of the population at high tide estimates investing in equities and Domestic institutional portfolios and Asset allocation strategies well-worn with two decade old picks.

Pharmaceuticals are doing well as they are not undone by circumspection or saturation at lower levels of penetration still dogging both Discretionary and Non Discretionary consumer plays

English: ICICI Bank - Leeds Branch - Roundhay Road
English: ICICI Bank – Leeds Branch – Roundhay Road (Photo credit: Wikipedia)

Up ↑

%d bloggers like this: