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Banking: The 'negative return' savings account...

May 25, 2007

31% of India's population has a bank account (source: RBI). The average size of a deposit account in the rural areas is about one-third the size in urban areas and ranges from about Rs 7,000 (in Andhra Pradesh) to about Rs 17,000 (in Punjab). Savings accounts (27% of total system deposits) form a major chunk of this due to its maneuverability across deposit sizes. Term deposits (60% of total system deposits), which typically enjoy the benefit of rise in interest rates, however, have been camoufl

Banking: Basel II calling…

May 4, 2007

With a view to adopting the Basel Committee framework on capital adequacy (which takes into account the elements of credit risk in various types of assets) and also to strengthen the capital base of banks, the RBI decided to introduce a risk weighted asset ratio system for banks in India as a capital adequacy measure in April 1992. Essentially, under the above system, the balance sheet and off-balance sheet exposures are assigned prescribed risk weights and banks have to maintain unimpaired mini

Banks: Retard after the rally

Dec 28, 2006

One fact that can be underscored for the banking sector in the year 2006 is that – it was a year of sheer excesses! While financial inclusion and evolution of advanced monetary infrastructure is the hallmark of any developing economy, in India, the same has been conspicuously evident over the last two years. To put things in perspective, while the credit to GDP ratio grew by 23% point to point between FY04 and FY06, the per capital credit in the economy (Rs 13,614 in FY06) also grew by 7% in tha

Banks: 'Private' score

Nov 9, 2006

Banking stocks were at the centre of the spotlight during the last couple of months, not without a reason! The month preceding the result season, and that which saw the 2QFY07 numbers trickling in, witnessed investors acknowledge the tenacity of the sector and its relevance in accomplishing the desired economic growth targets.

India: Mis-governance at its best!

Aug 8, 2006

Addressing the 35th convocation of IIT Bombay in August 1997, the legendary jurist Nani Palkhivala started with a note of warning, that "Never had India in its entire history ever reached a lower level of degradation than it had reached now. The only achievement of the Indian democracy had been that it had survived unfractured for fifty years. We started our republic with three inestimable advantages. First five thousand years of civilization behind us, second a political entity united under

Banks: And the tussle continues...

Jul 13, 2006

As the June quarter results of the banking sector start trickling in from today (starting with UTI Bank), investors are eagerly awaiting numbers that will reassure them of sustenance in credit growth and persistence of the capex cycle in the economy. While concerns over liquidity and margin pressure loom large, apprehension over capital constraints (with the onset of Basel II) and ability to counter foreign counterparts also seem to be weighing heavy on investor sentiment.

BOI: Should you subscribe?

Mar 22, 2005

'Assessing quality of assets is imperative for valuing a banking entity', may be a statement sounding clichéd. But when speculations of prospective mergers and public issue announcements cause investors to go gung-ho on the banking sector, it becomes important to reinstate these basic doctrines of investing.

Corporation Bank: In slow motion…

Mar 16, 2005

Revered for being one of the oldest and fundamentally strong PSU banks, in terms of operational and efficiency parameters, Corporation Bank has historically enjoyed a better valuation as compared to its PSU peers.

Monetary policy demystified…

Mar 9, 2005

Apart from the Union Budget, another ‘event’ that has a lasting impact on the economy is the RBI’s monetary policy. Declared semi-annually (i.e. March and September), the monetary policy takes stock of the economy’s liquidity and inflationary conditions and employs the necessary tools to revive it. In its conduct of monetary policy, the central bank responds to the evolving economic activity within an articulated monetary policy framework.

PSU Banks: Worth investing?

Dec 17, 2004

Mammoth balance sheet sizes, bloated work force and lack of operating efficiency are some of the common characteristics associated with PSU banks. To shake off this image and get rid of their government legacy, PSU banks are now seeking more autonomy. As opposed to the common perception, these banks are also striving to catch up with their private sector counterparts, in all respects.

NPAs: PSU banks leading change

Nov 23, 2004

Banking stocks are once again in the limelight on the bourses. While last time, the surge in banking stocks was on the back of improving scenario for the industry owing to falling interest rates, this time around, the optimism towards the sector could be attributed to the rise in interest rates. Strong credit growth on the back of enhanced capital expenditure by India Inc. augurs well for the banking industry’s core business growth going forward. However, in this article, we shall look at the ex

OBC: Looking forward to the merger

Oct 30, 2004

Like in the June quarter, lower provisioning for NPAs has helped Oriental Bank of Commerce (OBC) to post a healthy improvement in its bottomline growth for 2QYF05. For the September quarter, while the bottomline has surged by 32%, the topline has risen by a marginal 6%. However, unlike the previous quarters, there has been a lackluster improvement in the bank's net interest income. This may indicate that the bank has not been able to significantly reduce its interest expenses during 2QFY05. Ther

BOI: What numbers say?

Oct 21, 2004

Bank of India (BOI), the third largest bank in the country, reported a rather improved quarterly performance for the September quarter relative to its performance over the last few quarters. For 2QFY05, while the bank's topline rose 8% YoY, operating margins witnessed a YoY growth of nearly 9%. But this was negated due to treasury losses (other income declined by 47%). There has however, been a significant improvement in the bank's net interest income highlighting the strength of its core busine

HDFC Bank: Other income surprise

Oct 21, 2004

HDFC Bank has sustained its robust financial performance despite losses on its investment portfolio. Strong growth in the company's assets continues to be the main driver. For 2QFY05, while the topline has risen by 15% YoY, the bottomline has increased at a faster rate (30% YoY). The bank continues to keep its interest costs low and this has significantly helped the growth in net interest income. Other income has improved indicating that the bank has managed to improve its fee-based income and h

Corporation Bank: Is the worst over?

Oct 21, 2004

Corporation Bank, has reported dismal results for the September quarter on the back of significant rise in provisioning. While NPA provisioning in the September quarter is low, we believe most of the provisioning has been made towards depreciation in value of the company's investment (G-Sec) portfolio. Corporation Bank's bottomline has fallen by a significant 81% and topline has grown by a marginal 3% in 2QYF04 on a YoY basis, topline performance being much in line with the earlier quarters. The

Global Trust Bank: FY04 numbers

Aug 10, 2004

Global Trust Bank (GTB) approved the audited accounts for FY04 at its meeting held yesterday. The accounts were finalized in the backdrop of the proposed draft scheme of amalgamation with Oriental Bank of Commerce (OBC).

Bank G-Sec fears: How real?

Jun 11, 2004

There has been a persistent fear among the investment fraternity of a possible erosion of the value of investment portfolio of banks if there is a rise in interest rates. These fears have been compounded due to the fact that public sector banks, which are bound by regulatory requirements to maintain G-Sec investment portfolios, have in the last 2-3 years increased their exposure to this segment.

Corporation Bank: Losing steam

Apr 27, 2004

Corporation Bank, continuing with its dull performance in the last quarter has reported its FY04 results. The bank has reported a 5% topline growth and a 21% bottomline growth for the full year. While it has managed to improve further upon its net interest margins and consequently its operating margins, the bottomline growth seems to have been mainly effected by a strong fall in provisioning for NPAs. Infact, if the provisioning were to be kept at the FY03 levels, the bottomline growth would hav

Corporation Bank: Lending slows down

Jan 15, 2004

Corporation Bank reported dismal and unexpected results for the December quarter. While the topline has risen by a marginal 4%, the bottomline has fallen by a steep 25% in 3QFY04. The fall in bottomline seems to be mainly on account of a fall in other income as well as a significant rise in provisioning. Operating margins have, however, shown an improvement in the December quarter.

Banking: PSU banks in limelight

Dec 24, 2003

2003 was a rather normal year in comparison to 2002, which saw a lot of activity in the banking sector especially in the context of policy changes. However, the year saw a further reinforcement of the fact that retail lending is here to stay and that too in a big way.

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