Banking Weekly - Update for the week ended Jan 08, 2016 Abhinesh Vijayaraj [email protected]+91 44 4344 0006 Nishant Rungta [email protected]+91 44 4344 0033 Navin Babu [email protected]+91 44 4344 0065 Date 12 Jan, 2016 BSE SENSEX 24934 NIFTY 7601 BSE BANKEX 18368 CRR % 4.00 SLR % 21.50 Reverse Repo % 5.75 Repo % 6.75 MSF% 7.75 Base Rate % 9.30/9.70 Deposit Rate % 7.00/7.90 INR/ US$ 66.64 WPI% -1.99 CPI% 5.41 Sensex DOWN 4.53% ending at 24934 wow; Bankex DOWN 4.97% to 18368 • The BSE Sensex was DOWN 4.53% for the week ending at 24934, a decrease of 1183points while the BSE Bankex was DOWN 4.97% (DOWN 960 points) over the previous week to end at 18368. • The Spark NBFC Index was DOWN 6.16% to close at 207.64 from the previous week's close of 221.27 (Index value: 100 on 01/01/2012). Key Takeaways • The 10Y G-Sec yield was UP 1bps wow ending at 7.74% and the 5Y yield was DOWN 3bps wow ending at 7.62%. • Spread between 10Y and 6M G-sec yields moved DOWN to 55bps, with the long term 10Y yield trending higher than the 6M yield. • The 10Y bond yields was DOWN 15bps in US (2.12%), DOWN 19bps in UK (1.77%), DOWN 34bps in Brazil (6.85%) and UP 1bps in China (2.87%). • For the fortnight ended Dec 25, credit grew 11.2% yoy while the deposits grew by 10.88% yoy. During the fortnight, banks’ credit off take was UP by Rs.493bn, while deposits were DOWN by Rs.3bn, with the CD ratio at 74.6%. • ICICIBC CDS rate was UP 6bps wow to 182bps while SBI CDS rate was UP 1bps wow to 163bps. • The 10Y AAA spread was DOWN 0bps to 0.65% and the 5Y AAA spread was UP 4bps to 0.75%. • 3M CD rates were DOWN 0bps to 7.26%, 6M rates were DOWN 0bps to 7.46%, 12M rates were DOWN 0bps to 7.62%. • Spread between overnight rate and 12M OIS rate trended lower to 6bps, suggesting that the market is expecting rates to decrease by ~6bps from 7.02% in the next 12 months. • Call money rate was UP 39bps to 6.84%, from the 6.45% levels seen during the past week. • INR depreciated by 0.37% wow, against the USD, closing at 66.64 in the spot markets, while the USD/INR forward rates were higher across tenors by ~1.01% wow. • Gold price was UP 3.26% wow at INR 25858 per 10gm in INR terms and UP in USD terms by 4.02% wow and closed at USD 1104 per troy ounce. Crude oil prices were DOWN in USD terms by 10.18%, closing at USD 33.3. 1 2% 1% -2% -2% -2% -3% -3% -4% -4% -5% -6% -6% -6% -7% -8% -9% -10% 1% 0% -1% -2% -3% -3% -4% -5% -6% -6% -12% -10% -8% -6% -4% -2% 0% 2% 4% JKBK SIB HDFCB KVB IIB CUBK KMB BOI YES DCBB CBK FB ICICIBC SBIN AXSB PNB BOB CIFC SUF LICHF SHTF MMFS IDFC SCUF REC PFC REPCO Stock price movement (wow)
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Banking Weekly - Update for the week ended Jan 08, 2016
Reserve Bank of India: The government re-appointed Mr. Urjit R. Patel as the Deputy Governor of the Reserve Bank of India for a further period of three years with effect
from taking charge of the post on or after January 11, 2016.
IDBI to raise funds via QIP: IDBI Bank has hired seven banks to raise Rs.37.7 bn through a qualified institutional placement issuance. At its current market capitalization,
the QIP will result in a dilution of around 15-20% in the government’s shareholding in the bank.
CUB opens a new branch: CUB informed the markets that it has opened a new branch in Madanapalle, in the Chittoor district. With this the total tally of the bank’s
branches is up to 492.
Banks may sell Rs.3 trillion to ARCs: Vinayak Bahuguna, MD and CEO, Asset Reconstruction Company of India Ltd indicated that the next 6-12 months could see
intense acceleration in the sell down of loans by banks. Once the Insolvency and Bankruptcy Bill is passed, the banks may put bad loans aggregating Rs.3.0 trillion on the
block in calendar 2017.
Federal Bank introduces fund transfer through missed call: Federal Bank introduced a funds transfer facility for its customers by the use of a missed call to the bank’s
dedicated number. The daily transaction limit for this service is Rs.5,000 with a monthly cap of Rs.25,000. The service is available 24X7 and has been offered free of
charges.
Bandhan’s deposit growth: According to Chandra Shekhar Ghosh, Founder-MD and CEO of Bandhan Bank, deposits have grown to nearly Rs.50 bn in a little over four
months of its existence. The bank, which started operations in August 2015,, has opened 605 branches across 27 states.
NHB for further disclosure on default accounts: National Housing Bank has asked mortgage firms to share information on default of Rs 2.5mn and above by wilful
defaulters so that further credit to such borrowers is halted.
SDRs to defer NPA recognition: According to a report, the strategic debt restructuring route introduced by the RBI will defer recognition of loans worth Rs.1.5 trillion as
non-performing assets, without solving the core bad asset problem.
Govt. may sell stake in Axis Bank: The Government is considering selling part of its stake in Axis Bank. At the current market price, the Government's stake of 11.6 per
cent in the bank is worth about $1.8 billion.
SBI to set up special branch for start-ups: SBI announced that it will soon set up a first-of-its-kind branch in Bangalore to cater exclusively to the growing banking needs
of start-ups. The new branch will be set up to give banking and other services to start-ups. This branch will give start-ups the necessary infrastructure and facilities for
meeting their banking needs.
RBI Notifications
RBI releases Primary (Urban) Co-operative Banks’ Outlook 2014-15: The Reserve Bank of India today released the 2nd volume of the annual publication titled ‘Primary
(Urban) Co-operative Banks’ Outlook 2014-15. [LINK]
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Absolute
Rating
Interpretation
BUY Stock expected to provide positive returns of >15% over a 1-year horizon REDUCE Stock expected to provide returns of <5% – -10% over a 1-year
horizon
ADD Stock expected to provide positive returns of >5% – <15% over a 1-year
horizon SELL Stock expected to fall >10% over a 1-year horizon
Disclaimer (Cont’d)
Page 12
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