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  • 7/30/2019 Banking Sector Update

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    Please refer to important disclosures at the end of this report 1

    Asset quality woes aggravate during the quarter: Asset quality stress has remainedat elevated levels for banks, thereby denting sectors performance and outlook.

    Until 4QFY2013, there were signs of moderation in pace of asset quality

    deterioration, as the increase in annualized slippage ratio for overall FY2013

    came in 26bp yoy, much lower than the increase of 38bp and 57bp yoy

    witnessed in 9MFY2013 and 1HFY2013, respectively. In 1QFY2014, asset quality

    woes intensified, as annualized slippage rate surged to 3.7%, a much higher

    increase of 63bp yoy. Elevated slippages coupled with moderate performance on

    the recoveries and upgrades front, resulted in sharp 16.8% qoq increase in Gross

    NPA levels for our coverage PSU banks, while the increase was moderate for our

    coverage Pvt. banks at 5.4%.

    Lower inflation catalyst unlikely to play out, lower interest rates now depend moreon exchange rate stability: Until a couple of months back, lower inflation wasexpected to be a big positive catalyst for the economy, as it would have eventually

    led to lower rates, improvement in growth, higher savings and investments

    mobilization, improved asset quality outlook and higher MTM gains. However,

    recent series of RBI measures to tighten domestic liquidity so as to check exchange

    rate volatility, has effectively made our monitory policy movement tied to Federal

    Reserve moves and has led to significant surge in interest rates across the yield

    curve, which has put a clear hurdle in lower inflation catalyst playing out.

    Tough time to continue for Indian Banks: Given RBIs policy tightening measuresto check USD-INR volatility, macro environment is expected to remain challenging

    in near term and elevated interest rates and slower growth appears inevitable

    now. Credit growth for the banking sector is expected to reduce from the levels

    envisaged earlier. Asset quality outlook also remain tough, as apart from

    continued elevated level of slippages, higher restructuring and increased

    slippages from restructured book can be expected. Though the quantum of MTM

    losses has reduced post the RBI relaxation on transfer within book, the outlook on

    bond prices still has a downward bias and hence MTM losses would remain

    meaningful, so as to affect overall earnings.

    Outlook and Valuation: Elevated interest rates, weakening growth, and a volatilecurrency would ensure that the earnings pressures for Indian banks will increase

    here on. PSU banks, apart from the cyclical headwinds mentioned above, alsoface structural challenges in terms of a) low capital adequacy (for many of them;

    which increases the risk of book dilutive capital raising and hurt growth

    prospects), and b) higher competitive intensity (not only loss of deposits and credit

    market share, but also of profitability - as current credit cycle evidently highlights

    adverse asset selection on part of PSUs and superior selection by private banks in

    the past, which is reflecting in their performance now). Although valuations for all

    of them are below their historic lows, their fundamental investment case appears

    weak enough to avoid them, until clarity emerges on macro front.

    Overall, we have a cautious stance on the sector and would recommend staying

    with the defensives in the near term. After the recent correction in prices, HDFC

    Bank becomes a Buy for us. We like ICICI Bank and Axis Bank, which in our view,offers value over a medium to long term perspective, though we do not rule the

    possibilities of these stocks undershooting the fair value estimates in the near

    term, given the fragile macro environment.

    Vaibhav Agrawal022 3935 7800 Ext: 6808

    [email protected]

    Sourabh Taparia022 3935 7800 Ext: 6872

    [email protected]

    Harshal Patkar022 3935 7800 Ext: 6847

    har[email protected]

    Banking - 1QFY2014 Result ReviewMacro environment remains challenging

    Sector Update | Banking

    August 28, 2013

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    Banking | Sector Update

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    Heavy slippages and high inventory of Gross NPAs coupled with

    low C/D ratio caused margins to fall

    Persistent asset quality pressures continue to affect the banking sectors margins

    quarter after quarter, as more than half of our coverage banks reported sequentially

    lower margins during 1QFY2014. Andhra Bank (ANDBK) and South Indian Bank

    (SIB) witnessed the highest sequential margin compression, on account of higher

    interest reversals on heavy slippages witnessed during the quarter (slippages for

    ANDBK and SIB were higher sequentially by 26.8% and 48.0%, respectively during

    the quarter).

    Exhibit 1:Our coverage banks performance on reported margins frontBank 1QFY2014 4QFY2013 Chg (bps) Bank 1QFY2014 4QFY2013 Chg (bps)ANDBK 2.70 3.04 (34) SBI 3.44 3.48 (4)

    SIB 2.93 3.20 (27) CENTBK 2.68 2.68 -UNBK 2.63 2.89 (26) YESBK 3.00 3.00 -

    VIJAYA 2.00 2.21 (21) PNB 3.52 3.51 1

    CANBK 2.21 2.39 (18) ALLBK 2.83 2.81 2

    SYNBK 2.83 2.97 (14) FEDBK 3.13 3.07 6

    INDBK 2.74 2.88 (14) BOI 3.07 3.00 7

    BOB 2.84 2.93 (9) J&KBK 4.15 4.07 8

    BOM 3.02 3.10 (8) OBC 2.90 2.82 8

    UCOBK 2.27 2.34 (7) DENABK 2.55 2.46 9

    IDBI 2.12 2.19 (7) HDFCBK 4.60 4.50 10

    ICICIBK 3.27 3.33 (6) AXSB 3.86 3.70 16

    IOB 2.24 2.30 (6) UTDBK 3.30 2.67 63

    CRPBK 2.26 2.31 (5) SBI 3.44 3.48 (4)

    Source: Company, Angel Research, Note: *domestic margins for SBI, BOB, BOI

    Exhibit 2:CD ratio contracts sequentially for more than half of the coverage banksBank 1QFY14 Chg (bps)QoQ Chg (bps)YoY Bank 1QFY14 Chg (bps)QoQ Chg (bps)YoYUCOBK 70.7 (329) (619) ANDHBK 79.8 36 (60)

    DENABK 68.9 119 (594) SYNBK 81.8 223 (28)

    BOB 68.8 (45) (588) PNB 76.9 (197) 46

    VIJAYA 64.5 (741) (409) OBC 72.6 (70) 59

    UNBK 73.1 (579) (357) ALLBK 71.6 (88) 115

    BOI 73.6 (214) (345) SBI 84.4 (258) 123

    YESBK 73.4 324 (331) HDFCBK 85.3 434 241

    FEDBK 72.4 (414) (285) ICICIBK 103.5 431 326

    CRPBK 70.8 (75) (272) J&KBK 67.0 599 448

    CENTBK 75.7 (39) (263) IOB 85.0 571 480

    SIB 71.6 (29) (202) AXSB 83.1 513 623

    CANBK 65.4 (263) (199) BOM 77.9 (208) 672

    INDBK 73.0 (139) (90) IDBI 97.6 1120 1047

    Source: Company, Angel Research

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    Banking | Sector Update

    August 28, 2013 3

    CASA witnesses moderate growth; in-line with seasonal trend

    CASA deposits saw a typical seasonal trend during the quarter, as savings

    deposits for our coverage universe grew by 9.1% yoy, while current deposits grew by

    12.2% yoy.

    Private banks continued to outperform their PSU peers on the savings deposits (SA)

    front, with a growth of 17.8% yoy. Amongst our coverage Private banks, Yes Bank

    witnessed the highest SA growth of 120.6% yoy (it continued to witness significant

    traction post the hike in savings rate to 6-7%). Within large Private banks, while Axis

    Bank and HDFC Bank fared well and reported a healthy growth of 19.9% and

    16.7% yoy respectively, ICICI Bank witnessed a moderate growth of 14.0% yoy.

    Amongst PSU banks, the top two performers on the SA front were IDBI Bank

    (25.8% yoy growth on account of continued traction witnessed post waiver of CASA

    charges during FY2012) and Bank of India with 16.2% yoy growth respectively.

    On the current deposits (CA) front, UCO Bank registered a strong performance, as

    its CA deposits more than doubled on a yoy basis, due to substantial float being

    made available on opening of rupee accounts with the bank for facilitating

    Indo-Iran trade payments. Amongst other PSU banks, the top two performers on the

    CA front were Bank of Baroda (43.2% yoy) and Syndicate Bank (37.9% yoy). Private

    banks managed to outperform their PSU counterparts on the CA front this time

    around, with a growth of 14.0% yoy, compared to a growth of 11.6% yoy for PSU

    banks, whose performance on the CA front was affected on account of de-growth by

    IDBI Bank and weak performance by PNB.

    Exhibit 3:CASA ratio and Investment-to-deposits ratio for our coverage banks as of 1QFY2014

    Source: Company, Angel Research

    20

    43

    21

    42

    29

    28

    19

    40

    23

    45

    19

    35

    29

    24

    29

    38

    45

    32

    27

    24

    32

    21

    26

    31

    31

    28

    64

    60

    47

    43

    42

    38

    38

    37

    36

    35

    35

    34

    34

    34

    34

    34

    33

    33

    32

    30

    30

    29

    28

    27

    25

    25

    0.0

    10.0

    20.0

    30.0

    40.0

    50.0

    60.0

    70.0

    YE

    SBK

    ICIC

    IBK

    IDBI

    A

    XSB

    FEDBK

    DEN

    ABK

    COR

    PBK

    J&

    KBK

    CANBK

    HDFCBK

    V

    IJBK

    B

    OM

    AL

    LBK

    O

    BC

    UNIONBK

    PNB

    SBI

    CEN

    TBK

    INDBK

    ANDHBK

    UCOBK

    SIB

    IOB

    BOI

    BOB

    SYNBK

    CASA Ratio Investments to Deposits - (%)

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    Banking | Sector Update

    August 28, 2013 4

    Exhibit 4:CASA deposits witness moderate growthBank SA -1QFY14 SA -1QFY13 yoygrowth CA -1QFY14 CA -1QFY13 yoygrowth CASA -1QFY14 CASA -1QFY13 yoygrowth CASARatioPrivate BanksYESBK 6,622 3,001 120.6 6,542 5,169 26.6 13,163 8,170 61.1 20.2

    AXSB 63,298 52,777 19.9 37,798 34,165 10.6 101,096 86,942 16.3 42.4

    ICICIBK 88,853 77,923 14.0 36,981 30,754 20.2 125,834 108,677 15.8 43.2

    FEDBK 13,811 11,977 15.3 2,692 2,358 14.2 16,503 14,335 15.1 29.0

    HDFCBK 89,480 76,674 16.7 46,071 41,682 10.5 135,551 118,356 14.5 44.7

    SIB 7,290 6,390 14.1 1,678 1,445 16.1 8,968 7,835 14.5 20.6

    PSU BanksUCOBK 30,053 26,861 11.9 26,705 9,291 187.4 56,758 36,151 57.0 32.1

    BOB 83,530 75,562 10.5 34,669 24,214 43.2 118,199 99,776 18.5 31.2

    BOM 27,297 24,023 13.6 9,950 7,596 31.0 37,247 31,619 17.8 35.3

    BOI 78,189 67,308 16.2 18,498 15,926 16.2 96,687 83,233 16.2 30.6

    SYNBK 37,370 34,275 9.0 13,774 9,987 37.9 51,144 44,262 15.5 28.0

    UNIONBK 57,663 50,565 14.0 21,445 18,177 18.0 79,108 68,742 15.1 29.1

    J&KBK 18,445 16,081 14.7 5,134 4,480 14.6 23,579 20,560 14.7 40.2

    CENTBK 61,264 53,943 13.6 12,910 10,837 19.1 74,174 64,780 14.5 32.1

    ALLBK 44,288 38,608 14.7 8,854 7,865 12.6 53,142 46,473 14.4 29.5

    CANBK 73,938 66,504 11.2 14,374 11,398 26.1 88,312 77,902 13.4 23.1

    PNB 123,228 107,425 14.7 26,718 25,723 3.9 149,946 133,148 12.6 37.8

    CORPBK 20,279 18,350 10.5 10,853 9,419 15.2 31,132 27,769 12.1 19.1

    SBI 438,639 390,410 12.4 88,955 83,485 6.6 527,594 473,895 11.3 44.7

    OBC 31,293 28,092 11.4 10,551 9,899 6.6 41,844 37,990 10.1 23.7

    IDBI 22,145 17,606 25.8 15,565 17,037 (8.6) 37,710 34,643 8.9 20.6

    VIJBK 15,275 13,441 13.6 4,581 4,949 (7.4) 19,856 18,390 8.0 18.8

    INDBK 33,533 30,936 8.4 6,651 6,292 5.7 40,183 37,228 7.9 26.9

    DENABK 20,845 19,361 7.7 5,509 5,282 4.3 26,354 24,643 6.9 27.9

    IOB 38,874 36,370 6.9 11,378 10,985 3.6 50,252 47,355 6.1 25.6

    ANDHBK 24,182 22,485 7.5 6,047 6,269 (3.5) 30,000 28,754 4.3 23.8

    Source: Company, Angel Research

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    Banking | Sector Update

    August 28, 2013 5

    Exhibit 5:Yield on advances# for banks under our coverageBank 1QFY14 1QFY13 Chg (bps) Bank 1QFY14 1QFY13 Chg (bps)YESBK 12.8 13.0 (23) AXSB 10.5 10.9 (35)

    SIB 12.3 12.6 (30) VIJBK 10.5 11.4 (95)JKBK 12.1 12.4 (33) CANBK 10.5 10.9 (39)

    HDFCBK 11.8 12.2 (44) INDBK 10.4 11.3 (96)

    FEDBK 11.6 12.3 (64) PNB 10.3 11.1 (88)

    OBC 11.3 11.8 (48) IOB 10.2 10.8 (66)

    DENABK 11.0 11.4 (38) UNBK 10.1 10.9 (78)

    ANDBK 11.0 11.8 (89) UCOBK 10.0 11.3 (131)

    CRPBK 10.9 11.0 (15) ICICIBK* 9.7 9.9 (16)

    IDBI 10.9 11.3 (45) SYNDBK 9.4 10.5 (114)

    BOM 10.8 11.0 (20) SBI* 9.1 9.9 (87)

    UTDBK 10.7 11.1 (47) BOI* 8.3 8.7 (37)

    CNTBK 10.6 11.1 (49) BOB* 8.2 9.0 (76)

    ALBK 10.5 11.9 (136)

    Source: Company, Angel Research, Note:*includes significant overseas operations, #Calculated

    Exhibit 6:Risk adjusted yield on assets# for banks under our coverageBank 1QFY14 1QFY13 Chg (bps) Bank 1QFY14 1QFY13 Chg (bps)YESBK 9.3 9.8 (46) CRPBK 7.4 8.5 (111)

    JKBK 9.1 9.4 (22) ANDBK 7.4 9.2 (183)

    HDFCBK 8.8 8.6 13 AXSB 7.3 8.5 (119)

    SIB 8.6 10.0 (138) SYNDBK 7.2 8.1 (92)OBC 7.9 8.8 (92) INDBK 7.2 8.8 (166)

    BOM 7.9 7.6 29 ICICIBK* 7.0 7.6 (59)

    VIJBK 7.8 8.3 (44) SBI* 6.9 7.6 (67)

    ALBK 7.7 9.0 (133) IOB 6.9 8.1 (119)

    IDBI 7.5 8.1 (59) DENABK 6.9 8.8 (193)

    UNBK 7.5 8.3 (83) CNTBK 6.8 8.4 (162)

    PNB 7.5 8.2 (68) UCOBK 6.5 8.3 (183)

    CANBK 7.5 8.4 (94) BOI* 6.2 7.3 (103)

    FEDBK 7.4 9.4 (201) BOB* 5.9 6.7 (83)

    Source: Company, Angel Research, Note:*includes significant overseas operations, #Calculated

    Moderate performance on the non-interest income (excluding

    treasury) front

    Our coverage banks performance on the non-interest income (excluding treasury)

    front in 1QFY2014 was moderate, with a growth of 9.9% yoy, similar to 9.0% yoy

    witnessed during the last quarter. The moderate growth was aided by improved

    performance on the fee income front and higher recoveries on written off accounts.

    Private Banks performance on the non-interest income (excluding treasury) front

    was relatively better at 13.2% yoy, higher than our coverage PSU banks, which saw

    a moderate growth of 7.7% yoy. Amongst the large PSU banks, a yoy decline was

    witnessed in two of the seven banks (PNB and Bank of India),however, a 33.8% yoy

    growth in Canara Bank and a 21.4% yoy growth in IDBI Bank, aided the larger PSU

    pack to register a marginal growth of 5.5% yoy. Mid-PSU banks, on an aggregate

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    Banking | Sector Update

    August 28, 2013 6

    basis witnessed a healthy growth of 14.9% yoy, which was majorly on the back of a

    robust performance on the recoveries front. Within mid-PSU banks, the performance

    was aided by a healthy 44.7% yoy growth in Central Bank, 27.4% yoy growth in

    Allahabad Bank and 22.0% yoy increase in Vijaya Bank. Within mid-PSU banks, theworst performers were Andhra Bank and OBC, which registered a 21.2% and 14.0%

    yoy decline in non-interest income respectively, during the quarter.

    Exhibit 7:Moderate Non-interest income (excl. treasury) performance for banks under our coverageBank 1QFY2014 4QFY2013 % chg (qoq) 1QFY2013 % chg (yoy) As % to avg. assets1QFY2014 1QFY2013 Chg (bps)PrivateYESBK 442 379 16.5 288 53.4 1.79 1.52 27

    HDFCBK 1,726 1,739 (0.7) 1,583 9.0 1.69 1.81 (12)

    AXSB 1,341 1,769 (24.2) 1,185 13.2 1.59 1.65 (6)

    ICICIBK 2,081 2,115 (1.6) 1,901 9.5 1.55 1.59 (4)

    FEDBK 127 139 (9.0) 98 29.3 0.71 0.64 7

    SIB 66 107 (38.5) 55 20.0 0.53 0.54 (0)

    PSU-LargePNB 995 853 16.6 1,030 (3.4) 0.83 0.90 (7)

    SBI 3,273 5,318 (38.4) 3,272 0.0 0.82 0.95 (13)

    IDBI 574 1,004 (42.8) 473 21.4 0.75 0.67 8

    CANBK 794 755 5.3 594 33.8 0.75 0.63 12

    UNBK 517 640 (19.2) 436 18.6 0.65 0.66 (1)

    BOB 821 903 (9.0) 689 19.2 0.60 0.61 (1)

    BOI 657 937 (29.9) 740 (11.3) 0.56 0.75 (19)

    PSU-MidOBC 332 394 (15.5) 422 (21.2) 0.66 0.94 (28)

    IOB 397 498 (20.4) 401 (1.1) 0.66 0.72 (6)

    ALLBK 324 427 (24.0) 255 27.4 0.63 0.56 7

    CRPBK 297 443 (33.0) 285 4.1 0.62 0.71 (10)

    BOM 167 295 (43.4) 155 8.1 0.54 0.69 (15)

    INDBK 215 334 (35.6) 200 7.4 0.52 0.55 (3)

    ANDHBK 182 249 (27.0) 211 (14.0) 0.49 0.67 (18)

    CENTBK 319 493 (35.3) 220 44.7 0.47 0.38 9

    UCOBK 228 246 (7.3) 220 3.6 0.46 0.49 (3)VIJAYA 125 171 (26.4) 103 22.0 0.45 0.42 3

    J&KBK 73 125 (41.6) 73 (0.6) 0.42 0.49 (6)

    DENABK 118 152 (22.9) 110 7.2 0.42 0.48 (6)

    SYNBK 210 357 (41.4) 213 (1.4) 0.39 0.47 (7)

    Source: Company, Angel Research

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    Banking | Sector Update

    August 28, 2013 7

    Significant Treasury gains aided other income and bottom-line

    During 1QFY2014, the downward movement in bond yields, as expected, resulted

    in significant treasury gains for all our coverage banks. Treasury income for our

    coverage banks, on an aggregate basis grew more than four times to `7,210cr as

    compared to `1,403cr in 1QFY2013 and `3,578cr in 4QFY2013.

    Exhibit 8:Significant Treasury gainsBank 1QFY2014 4QFY2013 % chg (qoq) 1QFY2013 % chg (yoy)Private BanksFEDBK 89 58 54.6 26 239.2

    HDFCBK 200 65 207.4 67 200.0

    AXSB 440 238 84.7 150 192.8

    SIB 52 14 276.9 20 159.0

    ICICIBK 403 93 333.3 (21) -PSU BanksUCOBK 234 71 228.7 13 1,718.3

    INDBK 314 126 148.8 22 1,309.9

    ANDHBK 286 105 171.5 25 1,061.4

    DENABK 248 83 198.8 32 675.0

    VIJAYA 141 106 33.4 20 615.3

    CRPBK 285 124 128.8 43 567.8

    SBI 1,201 229 424.5 221 443.5

    BOI 524 157 233.1 100 421.9

    BOB 409 288 42.0 82 402.1

    CANBK 444 252 76.2 99 349.3

    UNBK 239 235 1.7 55 334.5

    SYNBK 85 42 102.4 23 269.6

    ALLBK 177 98 80.6 55 221.8

    IDBI 143 143 0.0 47 204.3

    CENTBK 279 143 95.1 102 173.5

    PNB 347 321 8.1 136 155.1

    BOM 58 87 -33.3 24 139.1

    J&KBK 19 84 -76.9 20 -3.6

    OBC 206 68 201.8 (13) -

    IOB 388 173 124.0 (25) -

    Source: Company, Angel Research

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    Banking | Sector Update

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    Asset quality woes aggravate during the quarter; and are unlike

    to abate as quickly as was expected earlier

    Asset quality stress has remained at elevated levels for banks, thereby denting

    sectors performance and outlook. Slippages for the banking industry have

    continued to trend northwards for the last couple of years. Until 4QFY2013, there

    were signs of moderation in pace of asset quality deterioration, as the increase in

    annualized slippage ratio for overall FY2013 came in 26bp yoy, much lower than

    the increase of 38bp and 57bp yoy witnessed in 9MFY2013 and 1HFY2013,

    respectively. In 1QFY2014, asset quality woes have intensified, as annualized

    slippage rate has surged to 3.7%, a much higher increase of 63bp yoy.

    Amongst large PSU banks, almost all witnessed a sequential and yoy increase in

    their quarterly slippage ratios. Large PSU banks, as a segment witnessed annualized

    slippage ratio of 4.2% as against 3.6%, a year ago. Within the mid-PSU ones,

    barring JKBK and UCOBK (which managed to lower their annualized slippage ratio

    by 110-340bp qoq and 20-100bp yoy), most others continued to witness elevated

    level of slippages and hence witnessed sequential and yoy increase in annualized

    slippage ratio. Mid PSU banks, as a segment witnessed annualized slippage ratio of

    3.7% as against 2.7% in 1QFY2013.

    Though efforts on recoveries/upgrades front have increased considerably, however,

    during the quarter most PSU banks reported moderate performance on the

    recoveries/upgrades front. Elevated slippages coupled with moderate recoveries and

    upgrades resulted in Gross NPA levels for our coverage PSU banks increasingly

    sharply by 16.8% qoq and 43.9% yoy.

    During the quarter, heavy treasury gains aided the banks to provide higher for NPAs

    and hence their provisioning expenses for our coverage PSU banks increased by

    41.5% yoy. However, most of them witnessed sequential drop in provision coverage

    ratio, as slippages during the quarter were much higher. Banks like, SBI PNB, BOB

    and CANBK - within the large PSUs and CNTBK, CRPBK, ANDBK and DENABK

    within the mid PSUs, witnessed much higher decrease in their provisioning coverage

    ratio compared to others. Higher sequential increase in GNPA levels and lower

    provision coverage (for most of our coverage banks) resulted in sequentially much

    higher net NPA levels for PSU banks (increase of 24.0% qoq and 61.6% yoy).

    Private Banks, on the other hand, though were not spared from asset qualitypressures, however they performed relatively much better vis--vis PSU banks on the

    overall asset quality front. Though private banks witnessed sequential and yoy

    increase in slippages, however, they also reported healthy recoveries and upgrades

    performances and as a result the sequential increase in Gross NPA levels for our

    coverage Pvt. Banks was limited to 5.4% qoq.

    Going ahead, we believe that the asset quality pressures are unlikely to abate as

    quickly as were expected earlier. Weakening economic growth environment,

    persisting burden of high interest servicing costs, significantly higher currency

    depreciation and its reflection on inflation (which had started moderating otherwise)

    would ensure that the slippages for the banking sector remain elevated in the nearterm, as against earlier expectations of moderation by the second half of the current

    fiscal.

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    Exhibit 9:Gross NPA trend (%) for the banking* industry

    Source: Company, Angel Research, Note: *all listed

    Exhibit 10:Net NPA trend (%) for the banking* industry

    Source: Company, Angel Research, Note: *all listed

    Exhibit 11:Gross NPA trends (%) Pvt. vs. PSU banks*

    Source: Company, Angel Research, Note: *all listed

    Exhibit 12:Net NPA trends (%) Private vs. PSU banks*

    Source: Company, Angel Research, Note: *all listed

    2.43 2.47 2.402.28

    2.43

    2.732.85 2.80

    3.09

    3.423.49

    3.32

    3.80

    2.10

    2.30

    2.50

    2.70

    2.90

    3.10

    3.30

    3.50

    3.70

    3.90

    1QFY11

    2QFY11

    3QFY11

    4QFY11

    1QFY12

    2QFY12

    3QFY12

    4QFY12

    1QFY13

    2QFY13

    3QFY13

    4QFY13

    1QFY14

    1.08 1.071.00 0.99

    1.04

    1.281.36

    1.30

    1.49

    1.74 1.80 1.72

    2.09

    0.90

    1.10

    1.30

    1.50

    1.70

    1.90

    2.10

    2.30

    1QFY11

    2QFY11

    3QFY11

    4QFY11

    1QFY12

    2QFY12

    3QFY12

    4QFY12

    1QFY13

    2QFY13

    3QFY13

    4QFY13

    1QFY14

    2.802.70

    2.572.36 2.33 2.24 2.17

    2.01 2.05 2.06 2.00 1.902.00

    2.34 2.42 2.35 2.272.45

    2.853.02 2.98

    3.34

    3.763.87

    3.67

    4.26

    1.50

    2.00

    2.50

    3.00

    3.50

    4.00

    4.50

    1QFY11

    2QFY11

    3QFY11

    4QFY11

    1QFY12

    2QFY12

    3QFY12

    4QFY12

    1QFY13

    2QFY13

    3QFY13

    4QFY13

    1QFY14

    Pvt Banks PSU Banks

    0.690.56 0.56 0.54 0.54 0.46 0.49 0.54 0.55 0.53

    0.62

    1.07 1.091.16

    1.47 1.56 1.501.73

    2.04 2.12 2.01

    2.47

    0.00

    0.50

    1.00

    1.50

    2.00

    2.50

    3.00

    3QF

    Y11

    4QF

    Y11

    1QF

    Y12

    2QF

    Y12

    3QF

    Y12

    4QF

    Y12

    1QF

    Y13

    2QF

    Y13

    3QF

    Y13

    4QF

    Y13

    1QF

    Y14

    Pvt Banks PSU Banks

  • 7/30/2019 Banking Sector Update

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    Banking | Sector Update

    August 28, 2013 10

    Exhibit 13:Asset quality woes aggravate in 1QFY2014, as annualized slippage rate inch up to 3.7%Bank 1QFY14 4QFY13 qoq (bps) 1QFY13 chg (bps) FY2013 FY2012 chg (bps) 9MFY13 9MFY12 chg (bps) 1HFY13 1HFY12 chg (bps)UTDBK 7.0 6.7 26 1.9 507 3.9 3.7 27 3.0 3.4 (41) 2.4 3.8 (141)

    CENTBK 5.6 1.9 368 3.9 166 3.5 5.3 (179) 4.0 3.4 62 4.4 2.8 154SBI 5.3 2.7 256 5.0 27 3.7 3.5 15 4.0 3.9 7 4.1 3.8 39

    ALLBK 5.2 9.3 (407) 2.1 311 5.3 2.4 292 4.0 1.8 216 4.2 1.4 272

    PNB 4.7 NA NA 3.8 89 2.9 2.8 19 3.5 2.1 136 5.0 1.8 319

    ANDHBK 4.5 4.3 30 4.0 56 3.5 3.1 46 3.3 3.2 8 3.8 3.7 10

    CANBK 4.4 1.9 257 2.6 186 2.5 2.2 34 2.7 2.2 54 2.9 2.5 49

    IOB 4.2 5.1 (92) 2.5 170 4.0 2.8 113 3.6 2.6 103 3.9 2.6 122

    SYNBK 3.6 2.0 162 3.4 22 2.9 2.7 21 3.2 2.3 93 3.3 2.5 87

    IDBI 3.4 2.0 143 2.3 113 1.8 2.0 (19) 1.8 2.4 (61) 1.8 2.0 (13)

    BOM 3.0 2.2 77 3.1 (18) 2.1 1.9 28 2.1 1.2 96 2.3 1.2 113

    CRPBK 2.9 (0.3) 321 2.9 5 1.8 1.4 40 2.5 1.6 88 2.3 1.5 79

    UNBK 2.8 2.0 85 3.7 (85) 2.2 2.5 (26) 2.3 2.8 (46) 2.7 3.4 (70)

    FEDBK 2.8 3.8 (102) 3.1 (30) 3.2 3.7 (50) 3.0 3.8 (81) 2.3 3.7 (139)

    SIB 2.8 2.2 58 1.3 142 1.9 0.8 109 1.9 0.7 117 2.4 0.7 170

    BOI 2.7 2.7 5 2.8 (6) 3.0 2.5 43 3.1 3.1 (9) 3.6 4.2 (63)

    BOB 2.6 2.9 (31) 1.8 82 2.4 1.5 88 2.2 1.2 96 1.9 1.0 88

    VIJAYA 2.6 1.8 83 3.3 (70) 2.8 4.2 (146) 3.1 4.7 (160) 3.6 4.4 (80)

    DENABK 2.5 2.8 (35) 1.4 113 2.0 1.6 36 1.7 1.4 27 1.7 1.4 34

    INDBK 2.4 5.8 (335) 1.0 141 4.1 2.5 159 3.5 1.5 203 2.1 1.5 69

    OBC 2.4 3.7 (135) 2.5 (15) 2.9 4.1 (119) 2.6 3.6 (100) 2.4 3.9 (150)

    UCOBK 2.0 5.3 (337) 3.0 (102) 4.5 2.4 205 4.2 2.1 208 4.2 2.1 210

    ICICIBK 1.5 1.2 31 1.4 17 1.5 1.4 6 1.5 1.5 6 1.6 1.4 23

    AXSB 1.4 0.9 45 1.1 31 1.2 1.3 (10) 1.3 1.2 3 1.3 1.1 16

    J&KBK 0.8 1.9 (106) 1.0 (19) 1.4 1.2 17 1.2 0.9 26 1.1 1.0 7

    HDFCBK NA NA NA NA NA NA NA NA NA NA NA NA NA NA

    YESBK NA NA NA NA NA NA NA NA NA NA NA NA NA NA

    Aggregate level SlippagesTotal Cov. 3.7 2.9 77 3.1 63 2.9 2.7 26 3.0 2.6 38 3.2 2.6 57PSU 4.0 3.1 84 3.3 68 3.1 2.8 29 3.2 2.8 43 3.4 2.8 63

    Large PSU 4.2 2.7 145 3.6 54 3.0 2.7 23 3.2 2.9 26 3.5 2.9 56

    Mid PSU 3.7 3.9 (23) 2.7 94 3.4 3.0 41 3.2 2.5 73 3.2 2.5 75

    Pvt. 1.6 1.4 27 1.4 25 1.5 1.5 1 1.6 1.5 4 1.6 1.5 16New Pvt. 1.5 1.1 36 1.3 22 1.4 1.4 (1) 1.4 1.4 5 1.5 1.3 20

    Old Pvt. 2.8 3.1 (35) 2.3 42 2.7 2.6 8 2.5 2.6 (7) 2.3 2.5 (18)

    Aggregate level Net Slippages (i.e. slippages minus recoveries and upgrades)Total Cov. 2.8 1.2 153 1.9 85 1.8 1.5 26 2.0 1.6 37 2.1 1.6 54PSU 3.0 1.3 163 2.1 91 1.9 1.7 23 2.1 1.8 36 2.3 1.8 51

    Large PSU 3.1 0.9 217 2.5 63 1.8 1.7 15 2.1 2.0 16 2.4 2.0 41

    Mid PSU 2.8 2.1 67 1.4 140 2.1 1.7 36 2.1 1.3 74 2.1 1.4 71

    Pvt. 1.4 0.5 86 1.0 40 0.8 0.3 47 0.9 0.5 44 1.0 0.3 71

    New Pvt. 1.2 0.5 66 0.8 35 0.8 0.3 45 0.8 0.4 42 1.0 0.3 66

    Old Pvt. 2.7 0.6 211 1.9 76 1.2 0.6 62 1.4 0.8 56 1.7 0.7 101

    Source: Company, Angel Research

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    Banking | Sector Update

    August 28, 2013 11

    Exhibit 14:Gross and Net NPA levels deteriorate sequentially during the quarterGNPA(` cr) NNPA(` cr) PCR (%)

    Bank 1QFY14 4QFY13 qoq (%) 1QFY14 4QFY13 qoq (%) 1QFY14 4QFY13 qoq (%)UTDBK 4,002 2,964 35.0 2,700 1,970 37.0 NA 62.5 NA CRPBK 2,749 2,048 34.2 1,900 1,411 34.7 56.8 62.1 (527)

    BOM 1,500 1,138 31.8 656 393 66.9 76.5 83.7 (718)

    ANDHBK 4,748 3,714 27.8 3,212 2,409 33.3 45.0 49.6 (455)

    CENTBK 10,529 8,456 24.5 6,527 4,988 30.9 42.5 47.8 (529)

    IDBI 7,959 6,450 23.4 3,872 3,100 24.9 68.0 70.8 (286)

    BOB 9,763 7,983 22.3 5,441 4,192 29.8 63.6 68.2 (460)

    DENABK 1,757 1,452 21.0 1,114 917 21.5 66.1 69.6 (344)

    ALLBK 6,164 5,137 20.0 4,922 4,127 19.3 48.2 50.0 (182)

    SYNBK 3,554 2,979 19.3 1,759 1,125 56.4 76.8 83.4 (666)

    SBI 60,891 51,189 19.0 29,990 21,956 36.6 60.6 66.6 (598)

    CANBK 7,329 6,260 17.1 6,209 5,278 17.6 58.2 61.4 (317)

    HDFCBK 2,719 2,335 16.5 689 469 46.9 74.7 79.9 (525)

    SIB 493 434 13.5 348 250 39.6 57.9 53.2 470

    IOB 7,432 6,608 12.5 4,580 4,027 13.7 58.7 58.9 (20)

    UNBK 7,093 6,314 12.3 3,883 3,353 15.8 63.4 65.2 (178)

    PNB 15,091 13,466 12.1 9,060 7,237 25.2 54.7 58.8 (416)

    YESBK 105 94 11.2 12 7 72.8 88.5 92.6 (410)

    BOI 9,413 8,765 7.4 6,409 5,947 7.8 61.0 60.9 5

    VIJAYA 1,645 1,533 7.3 977 910 7.4 67.3 68.3 (103)

    INDBK 3,723 3,565 4.4 2,486 2,384 4.3 61.3 60.1 111

    ICICIBK 10,009 9,608 4.2 2,463 2,231 10.4 75.4 76.8 (139)

    AXSB 2,490 2,393 4.0 790 704 12.2 68.3 70.6 (230)

    J&KBK 665 644 3.4 56 55 1.5 94.0 94.0 -

    OBC 4,303 4,184 2.8 2,936 2,903 1.2 63.9 63.0 88

    UCOBK 7,178 7,130 0.7 3,939 4,069 (3.2) 54.8 52.1 267

    FEDBK 1,483 1,554 (4.6) 374 432 (13.5) 74.8 72.2 261

    Source: Company, Angel Research

    Exhibit 15:Aggregate gross NPA levelsPrivate Banks*Bank (` cr) 1QFY14 4QFY13 1QFY13 %yoy %qoqPvt. New 16,824 15,646 15,154 11.0 7.5

    Pvt. Old 5,338 4,711 4,255 25.4 13.3

    Total 22,162 20,357 19,409 14.2 8.9Source: Company, Angel Research, Note: *all listed

    Exhibit 16:Aggregate gross NPA levels PSU Banks*Bank (` cr) 1QFY14 4QFY13 1QFY13 %yoy %qoqPSU Large 124,320 106,377 91,134 36.4 16.9

    PSU Mid 61,714 53,089 38,400 60.7 16.2

    Total 186,033 159,466 129,533 43.6 16.7Source: Company, Angel Research, Note: *all listed

    Exhibit 17:Aggregate net NPA levels Private Banks*Bank (` cr) 1QFY14 4QFY13 1QFY13 %yoy %qoqPvt. New 5,960 3,859 1,701 250.4 54.4

    Pvt. Old 2,326 1,867 1,300 78.8 24.5

    Total 8,285 5,726 3,001 176.1 44.7Source: Company, Angel Research, Note: *all listed

    Exhibit 18:Aggregate net NPA levels PSU Banks*Bank (` cr) 1QFY14 4QFY13 1QFY13 %yoy %qoqPSU Large 68,769 54,565 45,482 51.2 26.0

    PSU Mid 39,011 32,798 21,605 80.6 18.9

    Total 107,780 87,363 67,087 60.7 23.4Source: Company, Angel Research, Note: *all listed

  • 7/30/2019 Banking Sector Update

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    Banking | Sector Update

    August 28, 2013 12

    Incremental restructuring remained high during 1QFY2014

    During 1QFY2014, fresh addition to the restructuring book for banks remained

    elevated. Sectors like infrastructure (partly discom restructuring under FRP), textiles,

    and iron & steel contributed a larger chunk of incremental restructuring during the

    quarter. Amongst our coverage, PSU banks like SBI, CENTBK, PNB, UCOBK, BOB,

    and CANBK witnessed the highest restructuring during the quarter.

    Corporate debt restructuring (CDR) referrals have also risen significantly over the

    last several quarters, closely tracking the deteriorating economic growth

    environment. Under CDR mechanism, fresh approvals of around `21,000cr in

    1QFY2014 (in case the implementation is delayed for any reason) and the pending

    cases of around `42,000cr (only those which are approved and implemented during

    the quarter), would add to the restructuring book of participating banks during the

    quarter. As indicated by their Managements, the restructuring pipeline appears

    sizable for banks like SBI (~`10,000cr over next few quarters), CANBK (~`5,000cr),

    UNBK (~`5,000cr, which includes SEB restructuring worth `2,300cr), BOB

    (~`2,000cr), VIJYBK (~`3,500cr, which includes SEB restructuring worth `3,000cr),

    ANDBK (`3,300cr which includes discom worth `2,000cr), ALBK (~`1,500cr) and

    OBC (`1,400cr).

    Exhibit 19:CDR SnapshotYear (` cr) Referred ApprovedNo. of cases Additions No. of cases Additions

    FY10 31 20,175 31 17,763

    FY11 49 22,614 27 6,615

    1QFY12 18 4,595 10 8,141

    2QFY12 18 21,095 7 2,095

    3QFY12 23 19,187 17 21,364

    4QFY12 28 23,012 16 8,001

    FY12 87 67,889 50 39,601

    1QFY13 41 20,528 17 17,957

    2QFY13 33 18,907 18 18,925

    3QFY13 25 20,957 35 24,581

    4QFY13 31 31,256 39 17,035

    FY13 130 91,648 109 78,498

    1QFY14 27 39,370 14 21,266

    Total 549 337,511 415 250,279

    Source: CDR India, Angel Research

  • 7/30/2019 Banking Sector Update

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    Banking | Sector Update

    August 28, 2013 13

    Exhibit 20:Restructuring book as of 1QFY2014Bank Restructured book (` cr)1QFY2014 4QFY2013 Ch.qoq (%) % to total advCNTBK 25,794 22,681 13.7 14.8PNB 34,154 32,143 6.3 11.2

    IOB 18,356 18,050 1.7 11.0

    ALBK 13,595 14,875 (8.6) 10.5

    DENABK 6,538 5,423 20.6 10.1

    ANDBK 9,847 9,692 1.6 9.8

    INDBK 10,020 9,707 3.2 9.2

    OBC* 10,268 9,935 3.4 8.0

    IDBI 14,251 16,243 (12.3) 8.0

    CANBK 19,884 18,113 9.8 8.0

    BOB 25,155 22,617 11.2 7.8

    VIJBK 5,000 4,636 7.9 7.4

    UCOBK* 9,717 8,743 11.1 7.0

    UTDBK 4,781 4,555 5.0 7.0

    CRPBK 7,887 7,676 2.7 6.8

    UNBK 13,235 11,626 13.8 6.7

    SYNDBK 9,657 9,126 5.8 6.5

    FEDBK 2,500 2,054 21.7 6.1

    BOI* 16,231 16,353 (0.7) 5.3

    SIB 1,540 1,641 (6.2) 4.9

    JKBK 1,688 1,490 13.2 4.3

    SBI 44,811 43,111 3.9 4.2

    AXSB 4,211 4,368 (3.6) 2.1

    ICICIBK 5,915 5,315 11.3 2.0

    YESBK* 140 144 (3.3) 0.3

    HDFCBK 517 479 7.9 0.2

    Source: Company, Angel Research, Note:*standard restructuring book

  • 7/30/2019 Banking Sector Update

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    Banking | Sector Update

    August 28, 2013 14

    Divergence in Earnings continues - New Private Banks deliver

    strong performance, while PSUs and old private banks report

    weak performance

    Over the last few years, PSU banks have continuously lost profit market share (both

    on reported profit as well as on profit adjusted for increase in net NPAs) within our

    coverage. This could be primarily attributed to their relatively high exposure to

    overleveraged companies in sensitive sectors, whose financials have bore the most

    severe brunt of slowing economic growth and persisting burden of elevated interest

    servicing costs.

    As far as reported profit is concerned, the market share for PSU banks have

    noticeably declined from 77% in FY2010 to 68% in FY2013, however, the decline is

    much sharper in case of profit adjusted for increase in net NPAs, where PSU banks

    have witnessed market share erosion of ~25%, from 71% in FY2010 to 47% in

    FY2013. In 1QFY2014, PSU banks, on an aggregate basis, have reported earnings

    of `12,053cr, however, have also witnessed `19,876cr increase in net NPA levels

    during the quarter, thereby leading to loss of `7,824cr, on an adjusted basis.

    Exhibit 21:Profit market share trends for our coverage Banks PSU Banks losing significantlyBanks Reported Profit Profit adjusted for increase in Net NPAsFY2010 FY2011 FY2012 FY2013 1QFY14 FY2010 FY2011 FY2012 FY2013 1QFY14PSU banks 35,974 41,390 46,240 47,620 12,053 27,852 35,610 25,420 19,114 (7,824)

    Mid 11,995 14,205 14,863 14,625 3,745 9,028 12,524 5,906 2,388 (2,332)

    Large 23,980 27,186 31,377 32,995 8,308 18,824 23,086 19,515 16,726 (5,491)

    Private Banks 10,664 14,072 18,030 22,872 6,148 11,561 15,554 18,425 21,759 5,565Old 698 879 1,178 1,340 221 710 819 1,154 934 180

    New 9,966 13,193 16,852 21,532 5,928 10,851 14,735 17,272 20,825 5,385

    Market sharePSU Banks (%) 77 75 72 68 66 71 70 58 47 (346)

    Mid 26 26 23 21 21 23 24 13 6 (103)

    Large 51 49 49 47 46 48 45 45 41 (243)

    Private Banks (%) 23 25 28 32 34 29 30 42 53 246old 1 2 2 2 1 2 2 3 2 8

    new 22 24 26 31 33 28 29 39 51 238

    Source: Company, Angel Research

    During 1QFY2014, New Private Banks delivered a strong earnings growth of 28.3%

    yoy. On the other hand, PSU and old Private Banks reported a weak performance,

    primarily marred by elevated asset quality pressures and slower growth. During the

    quarter, PSU banks posted a bottom-line decline of 7.4% yoy (within which mid-

    PSUs reported higher earnings de-growth of 12.2% as against 4.9% for larger ones),

    while old private banks reported largely flat performance during the quarter.

    On the NII front, while new Private Banks reported a strong performance with

    growth of 26.8% yoy, old Private Banks too witnessed a healthy growth of 16.6%

    yoy. Affected by elevated asset quality pressures, PSU banks reported a modest NII

    growth of 7.0% yoy.

    During the quarter, a favorable yield movement aided almost all banks to book

    heavy treasury gains and hence other income growth during the quarter came in at

  • 7/30/2019 Banking Sector Update

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    Banking | Sector Update

    August 28, 2013 15

    a substantial 49.5% yoy for PSU banks and 38.9% yoy for Private Banks. Despite a

    moderate NII performance, strong other income growth (largely on back of heavy

    treasury gains) aided PSU banks, both mid and large, to report operating income

    growth of 22.0% and 14.1%, yoy respectively. On the operating income front,private banks reported a strong performance with a growth of 29.8% yoy.

    Apart from the impending wage revision, which all PSU banks continued to provide

    during the quarter, unlike other PSU banks, SBI also provided for higher retirement

    benefits on account of change in longevity assumptions (`600cr during the quarter,

    which is to continue at same pace over the next three quarters). As a result,

    operating expenses grew by 25.6% and 19.8% yoy, respectively for large PSU banks

    and mid-PSU banks. Consequently, the operating profit grew at a modest pace of

    5.6% yoy for large PSU banks, while the same grew at a much higher pace of 23.8%

    yoy for mid-PSU ones. Persistent asset quality stress (evident in 43.6% yoy increase in

    gross NPA levels of PSU banks), resulted in a 40.7% yoy increase in provisioningexpenses for PSU banks and hence, earnings for these banks declined by 4.7% yoy.

    Exhibit 22:Large PSU banks P&LParameter (` cr) 1QFY14 4QFY13 % chg(qoq) 1QFY13 % chg(yoy)NII 26,221 25,657 2.2 24,591 6.6

    Other Income 10,939 12,034 (9.1) 7,977 37.1

    Operating Income 37,160 37,692 (1.4) 32,569 14.1Operating Expenses 17,392 17,883 (2.7) 13,847 25.6

    Pre provision profit 19,768 19,809 (0.2) 18,722 5.6Provisions 8,072 11,045 (26.9) 6,299 28.2

    PBT 11,696 8,764 33.5 12,423 (5.9)

    Tax 3,388 479 607.0 3,685 (8.1)

    Net Profit 8,308 8,285 0.3 8,738 (4.9)Source: Company, Angel Research

    Exhibit 23:Mid-PSU* banks P&LParameter (` cr) 1QFY14 4QFY13 % chg(qoq) 1QFY13 % chg(yoy)NII 14,772 14,362 2.9 13,707 7.8

    Other Income 6,238 5,985 4.2 3,509 77.8

    Operating Income 21,010 20,347 3.3 17,216 22.0Operating Expenses 9,100 9,747 (6.6) 7,594 19.8

    Pre provision profit 11,910 10,600 12.4 9,622 23.8Provisions 6,402 7,418 (13.7) 3,987 60.6

    PBT 5,507 3,182 73.1 5,635 (2.3)

    Tax 1,641 (128) (1,379.2) 1,230 33.4

    Net Profit 3,867 3,311 16.8 4,406 (12.2)Source: Company, Angel Research; Note:* all excl. SBI associate banks

    On the other hand, Private Banks registered a 20.8% yoy increase in operating

    expenses and hence, operating profit for them grew at a much higher pace of

    37.5% yoy (37.0% yoy and 41.2% yoy for new and old private banks, respectively).

    On the asset quality front, new Private Banks were not sparred from asset quality

    pressures; however, they have faced relatively much lower pressures compared to

    old Private banks. Gross NPA levels for new Private Banks increased by 11.0% yoy,

    while for older ones it increased by a much higher 25.4% yoy. As a result, the

    provisioning expenses for new Private Banks during the quarter witnessed an

    increase of 67.7% yoy, while for older Private Banks it more than tripled on a yoy

    basis. Overall, on the earnings front, while new private banks reported a strong

    growth of 28.3% yoy, older ones reported flat earnings performances for the

    quarter.

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    Banking | Sector Update

    August 28, 2013 16

    Exhibit 24:New Private banks P&LParameter (` cr) 1QFY14 4QFY13 % chg(qoq) 1QFY13 % chg(yoy)NII 13,360 12,966 3.0 10,534 26.8

    Other Income 7,566 7,130 6.1 5,593 35.3

    Operating Income 20,926 20,096 4.1 16,127 29.8Operating Expenses 8,862 8,899 (0.4) 7,321 21.0

    Pre provision profit 12,064 11,197 7.7 8,806 37.0Provisions 2,230 1,573 41.8 1,330 67.7

    PBT 9,834 9,625 2.2 7,476 31.5

    Tax 3,168 2,770 14.4 2,281 38.9

    Net Profit 6,665 6,855 (2.8) 5,195 28.3Source: Company, Angel Research

    Exhibit 25:Old Private banks* P&LParameter (` cr) 1QFY14 4QFY13 % chg(qoq) 1QFY13 % chg(yoy)NII 2,295 2,208 3.9 1,968 16.6

    Other Income 1,199 1,023 17.2 719 66.7

    Operating Income 3,494 3,231 8.1 2,687 30.0Operating Expenses 1,631 1,670 (2.3) 1,367 19.3

    Pre provision profit 1,863 1,561 19.4 1,320 41.2Provisions 741 472 56.9 207 258.1

    PBT 1,122 1,089 3.1 1,113 0.9

    Tax 350 154 127.0 334 5.0

    Net Profit 772 934 (17.4) 779 (0.9)Source: Company, Angel Research, *all listed

    Exhibit 26:Advances* growth (%)Banks-Type 1QFY14 4QFY13 % chg(qoq) 1QFY13 % chg(yoy)Large PSU 2,623,880 2,618,480 0.2 2,357,536 11.3

    Mid PSU 1,585,449 1,565,991 1.2 1,377,491 15.1

    New Pvt. 903,972 866,725 4.3 771,011 17.2

    Old Pvt. 195,443 195,907 (0.2) 169,684 15.2

    Grand Total 5,308,743 5,247,103 1.2 4,675,722 13.5Source: Company, Angel Research; Note:* all listed excl. DHB, PSB, SBM, SBT

    Exhibit 27:Deposits* growth (%)Banks-Type 1QFY14 4QFY13 % chg(qoq) 1QFY13 % chg(yoy)Large PSU 3,373,014 3,296,757 2.3 2,958,479 14.0

    Mid PSU 2,011,931 1,998,279 0.7 1,741,178 15.6

    New Pvt. 1,006,280 1,013,575 (0.7) 884,872 13.7

    Old Pvt. 264,761 262,208 1.0 227,115 16.6

    Grand Total 6,655,985 6,570,819 1.3 5,811,644 14.5Source: Company, Angel Research; Note:* all listed excl. DHB, PSB, UTDBK,

    SBM and SBT

    Exhibit 28:DuPont analysis for our coverage universePvt. New PSU Large PSU Mid

    Parameter FY12 FY13 FY14E FY15E FY12 FY13 FY14E FY15E FY12 FY13 FY14E FY15ENII 3.1 3.3 3.4 3.5 2.8 2.6 2.5 2.6 2.7 2.5 2.4 2.4

    (-) Prov. Exp. 0.4 0.4 0.4 0.4 0.8 0.8 0.8 0.6 0.9 1.0 0.9 0.7

    Adj. NII 2.7 2.9 3.0 3.0 2.0 1.8 1.8 1.9 1.7 1.5 1.5 1.7

    Treasury (0.0) 0.1 0.1 0.0 0.0 0.11 0.1 0.0 0.1 0.14 0.1 0.0

    Int. Sens. Inc. 2.7 3.0 3.1 3.1 2.0 1.9 1.9 2.0 1.8 1.6 1.6 1.8

    Other Inc. 1.8 1.7 1.6 1.6 0.9 0.8 0.8 0.8 0.6 0.6 0.6 0.6

    Op. Inc. 4.4 4.6 4.7 4.7 2.9 2.7 2.7 2.8 2.5 2.3 2.2 2.3

    Opex 2.3 2.3 2.3 2.2 1.6 1.6 1.7 1.6 1.5 1.5 1.4 1.4

    PBT 2.2 2.4 2.5 2.5 1.3 1.1 1.0 1.2 1.0 0.8 0.8 0.9

    Taxes 0.7 0.7 0.8 0.8 0.4 0.3 0.3 0.4 0.2 0.1 0.2 0.3

    ROA 1.5 1.6 1.7 1.7 0.9 0.9 0.7 0.8 0.8 0.6 0.5 0.6Leverage 10.9 10.7 10.6 11.1 18.6 17.4 17.4 17.8 21.0 20.5 20.7 21.1

    ROE 16.5 17.6 17.9 18.6 17.2 14.9 12.2 13.8 15.9 13.2 10.8 12.5Source: Company, Angel Research

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    MTM losses lower post RBIs relaxation; however still remain

    significant to affect overall earnings

    Recent series of RBI measures to tighten domestic liquidity so as to check exchange

    rate volatility has led to significant surge in interest rates across the yield curve. Since

    July 15, 2013 (when first such measures were announced) to till date, interest rates

    across the yield curve have inched up considerably (higher for shorter maturities,

    thereby inverting the yield curve). While CD/CP rates are considerably higher by

    250-350bp, both sovereign and corporate bond yields across various maturity

    buckets have increased anywhere between 100-125bp.

    Indian banks, having realized significant treasury gains in 1QFY2014, are sitting on

    heavy MTM losses in their AFS/HFT investment book. As a one off measure, the RBI

    has recently allowed banks to move SLR securities to HTM from AFS/HFT category

    upto the limit of 24.5%, at cost or market value as at the end of July 15, 2013,

    whichever is lower. The move is positive primarily for State Bank of India (SBI),

    Canara Bank and OBC, as they have had higher headroom available within the

    24.5% limit. Moreover, the RBI also allowed banks to spread over the remaining

    MTM loss over the next three quarters. Considering AFS positioning as of June 30,

    2013 along with RBI relaxations, still PSU banks like SBI, Canara Bank, PNB,

    Corporation Bank and Union Bank are expected to witness significant MTM losses

    during 2QFY2014.

    Exhibit 29:CP/CD rates inched up after RBI measures

    Source: Bloomberg, Angel Research

    Exhibit 30:Bond yields too inched up

    Source: Bloomberg, Angel Research

    8.3

    4

    8.4

    2

    8.8

    2

    7.9

    4

    7.9

    9

    8.2

    0

    7.9

    3

    8.4

    4

    8.8

    6

    7.4

    5

    8.0

    2

    8.3

    2

    12.1

    3

    12.2

    8

    11.7

    1

    10.7

    8

    11.0

    1

    10.5

    3

    6.0

    7.0

    8.0

    9.0

    10.0

    11.0

    12.0

    13.0

    CP 1M CP 3M CP 12M CD 1M CD 3M CD 12M

    (%) 30-Jun-13 15-Jul-13 27-Aug-13

    8.7

    3

    8.6

    9

    8.6

    2

    7.4

    6

    7.7

    0

    7.4

    6

    8.9

    2

    8.9

    2

    8.8

    3

    7.5

    0

    7.8

    4

    7.5

    6

    10.7

    5

    9.9

    3

    9.7

    3

    9.8

    4

    9.1

    2

    8.5

    9

    6.0

    7.0

    8.0

    9.0

    10.0

    11.0

    12.0

    AAA 1 Yr AAA 5 Yr AAA 10 Yr Gsec 1Yr Gsec 5Yr Gsec 10Yr

    (%) 30-J un-13 15-J ul-13 27-Aug-13

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    Exhibit 31:MTM losses for banks post RBI relaxations

    Bank HTM(` cr)

    % ofDep$

    AFS(` cr)

    % ofDep$

    HeadroomAvail.(24.5 -HTM, in %)

    Headroomas % ofAFS book

    Mod.Duration

    MTM [email protected] RBIrelaxations(` cr)

    Qtrly MTMimpact, as RBIallowedspreading ofMTM losses

    CANBK 65,551 17.2 69,295 18.1 7.3 40.5 3.75 1,547 516IOB 45,086 23.0 13,836 7.1 1.5 21.6 4.71 511 170

    ALLBK 34,197 19.0 23,807 13.2 5.5 41.8 3.01 417 139

    CENTBK 53,485 23.2 21,659 9.4 1.3 14.1 3.00 558 186BOI 67,575 21.4 37,508 11.9 3.1 26.2 1.67 462 154

    BOM NA NA 6,686 6.3 NA NA 3.00 NA NA

    CRPBK 37,000 22.7 26,177 16.1 1.8 11.2 3.78 878 293PNB 86,525 21.8 45,626 11.5 2.7 23.4 4.66 1,628 543DENABK 24,722 26.2 6,825 7.2 - - 5.29 361 120SYNBK 34,676 19.0 11,369 6.2 5.5 88.3 3.00 40 13

    OBC 25,757 14.6 23,609 13.4 9.9 73.8 4.54 281 94

    UNBK 68,733 25.3 22,864 8.4 - - 2.91 665 222BOB 75,433 23.3 20,332 6.3 1.2 19.7 2.90 474 158

    ANDHBK NA NA 8,000 6.4 NA NA 3.00 NA NA

    JKBK 15,700 26.8 6,033 10.3 - - 2.84 171 57

    FEDBK NA NA 3,000 5.3 NA NA 2.76 NA NA

    INDBK 30,074 20.1 16,690 11.2 4.4 39.4 3.00 303 101

    IDBI 67,300 36.7 17,721 9.7 - - 1.30 230 77

    VIJAYA NA NA 11,323 10.7 NA NA 2.76 NA NA

    SBI 233,000 19.7 160,000 13.5 4.8 35.2 3.40 3,522 1,174Source: Company, Angel Research, Note: *due to unavailability of data regarding AFS duration, conservatively assumed it to be 3 years,# from the closing

    10 year G sec yields on June 30, 2013, $due to unavailability of data regarding NDTL uniformly for all our coverage banks, we have used total deposits for

    all and domestic deposits for BOB, SBI and BOI, hence the actual headroom to banks might be lower than depicted here

    Capital Adequacy low for many PSU banks

    Tier-I CAR, under Basel-III remains low for many PSU banks. As of 1QFY2014,

    amongst our coverage, Bank of Maharashtra, Dena Bank, Indian Overseas Bank,

    IDBI Bank, Central Bank, Corporation Bank and Allahabad Bank had the lowest tier-

    I CAR in the range of 6.8-7.8%. Moreover, PSU banks like UCO Bank, Vijaya Bank,

    Central Bank, United Bank, Bank of Maharashtra (BOM), Indian Bank and UnionBank also have sizeable preference capital, implying that core equity tier-I for these

    banks would be even lower.

    The government has budgeted `14,000cr for capital infusion in PSU banks for the

    current fiscal. Most of the PSU banks (SBI, BOM, Dena Bank, Indian Overseas Bank

    (IOB), and Syndicate Bank to name a few) have submitted requests for capital

    infusion already. The government is likely to finalize allocation of budget amount

    within these banks in the next few months. However, all PSU banks are now trading

    much below their book value, implying significant book-dilution for existing

    shareholders if the capital is to be infused now at current valuations. There is also a

    need to consider dividend payout policy and capital raising via rights issue forPSU banks, as healthy dividend payout by these banks coupled with capital infusion

    on preferential basis by the government at below book valuations is detrimental to

    the interests of existing shareholders.

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    Exhibit 32:Tier-I and Total CRAR under Basel-III, as of 1QFY2014Bank Tier-I CRAR Bank Tier-I CRARBOM 6.8 10.8 PNB 9.1 11.8

    DENABK 7.0 10.6 YESBK 9.5 15.4

    IOB 7.1 10.9 HDFCBK 10.5 15.5

    IDBIBK 7.7 12.6 JKBK 11.7 13.6

    CNTBK 7.7 11.3 ICICIBK 12.1 17.4

    CRPBK 7.7 11.3 AXSB 12.3 16.4

    ALBK 7.8 10.6 BOB NA 12.5

    UNBK 8.1 9.9 INBK NA 11.6

    SYNDBK 8.1 11.5 ANDBK NA 11.2

    OBC 8.7 11.0 UTDBK NA 10.8

    UCOBK 8.7 13.4 VIJBK NA 10.6

    SBI 8.8 11.9 BOI NA 10.4

    CANBK 9.0 11.4 SIB NA NA

    Source: Company, Angel Research

    Outlook and Valuation

    Elevated interest rates, weakening growth, and a volatile currency would ensure that

    the earnings pressures for Indian banks will increase here on. PSU banks, apart

    from the cyclical headwinds mentioned above, also face structural challenges in

    terms of a) low capital adequacy (for many of them; which increases the risk of

    book dilutive capital raising and hurt growth prospects), and b) highercompetitive intensity (not only loss of deposits and credit market share, but also of

    profitability - as current credit cycle evidently highlights adverse asset selection on

    part of PSUs and superior selection by private banks in the past, which is reflecting

    in their performance now). Although valuations for all of them are below their

    historic lows, their fundamental investment case appears weak enough to avoid

    them, until clarity emerges on macro front.

    Overall, we have a cautious stance on the sector and would recommend staying

    with the defensives in the near term. After the recent correction in prices, HDFC Bank

    becomes a Buy for us. We like ICICI Bank and Axis Bank, which in our view, offers

    value over a medium to long term perspective, though we do not rule the

    possibilities of these stocks undershooting the fair value estimates in the near term,given the fragile macro environment.

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    Exhibit 33:Recommendation summaryCompany Reco. CMP(`) Tgt. price(`) Upside(%) FY2015EP/ABV (x) FY2015ETgt. P/ABV (x) FY2015EP/E (x) FY2013-15EEPS CAGR (%) FY2015ERoA (%) FY2015ERoE (%)AxisBk Buy 839 1,023 22 0.9 1.1 5.3 19.1 1.6 18.1

    FedBk Neutral 257 - - 0.6 - 4.9 2.9 1.0 12.3

    HDFCBk Buy 562 692 23 2.6 3.3 12.5 26.3 1.9 22.8

    ICICIBk* Buy 797 951 19 1.1 1.4 8.2 15.8 1.6 15.4

    SIB Neutral 19 - - 0.7 - 4.6 5.7 0.9 16.2

    YesBk Neutral 226 - - 0.9 - 4.6 16.9 1.3 22.8

    AllBk Neutral 67 - - 0.3 - 2.2 12.6 0.6 12.4

    AndhBk Neutral 50 - - 0.4 - 3.0 (15.1) 0.5 10.0

    BOB Neutral 445 - - 0.5 - 3.6 8.3 0.8 14.2

    BOI Neutral 131 - - 0.3 - 2.1 16.2 0.7 13.9

    BOM Neutral 37 - - 0.4 - 3.2 5.4 0.5 14.1

    CanBk Neutral 195 - - 0.4 - 3.2 (3.4) 0.6 10.4CentBk Neutral 50 - - 0.5 - 3.2 40.1 0.5 12.8

    CorpBk Neutral 252 - - 0.3 - 2.6 2.3 0.7 13.5

    DenaBk Neutral 43 - - 0.3 - 2.0 (3.3) 0.6 13.2

    IDBI# Neutral 57 - - 0.3 - 2.6 25.1 0.8 13.3

    IndBk Neutral 63 - - 0.2 - 1.9 (4.2) 0.8 12.4

    IOB Neutral 39 - - 0.3 - 2.5 57.5 0.5 10.5

    J&KBk Neutral 1,053 - - 0.8 - 5.2 (3.5) 1.3 16.3

    OBC Neutral 126 - - 0.3 - 2.4 7.4 0.6 11.1

    PNB Neutral 435 - - 0.4 - 2.6 10.8 1.0 15.7

    SBI* Neutral 1,498 - - 0.9 - 6.6 4.7 0.8 13.9

    SynBk Neutral 65 - - 0.3 - 2.8 (16.0) 0.6 12.8

    UcoBk Neutral 51 - - 0.5 - 3.3 66.4 0.6 13.5

    UnionBk Neutral 100 - - 0.3 - 2.5 6.2 0.6 13.4

    UtdBk Neutral 30 - - 0.2 - 1.5 54.6 0.6 14.7

    VijBk Neutral 34 - - 0.4 - 3.8 (0.4) 0.4 9.8

    Source: Company, Angel Research; Note:*Target multiples=SOTP Target Price/ABV (including subsidiaries), #Without adjusting for SASF

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    Banking indicators watchExhibit 34:Credit and deposit growth trends

    Source: RBI, Angel Research

    Exhibit 35:Investment-Deposit ratio

    Source: RBI, Angel Research

    Exhibit 36:CP rates have gone up considerably...

    Source: RBI, Angel Research

    Exhibit 37:...similar to CD rates

    Source: Bloomberg, Angel Research

    Exhibit 38:RBI limits LAF borrowings...

    Source: RBI, Angel Research

    Exhibit 39:...resulting in higher MSF borrowings @ 10.25%

    Source: RBI, Angel Research

    5.0

    10.0

    15.0

    20.0

    25.0

    30.0

    Jul-09

    Oct-09

    Jan-1

    0

    Apr-10

    Jul-10

    Oct-10

    Jan-1

    1

    Apr-11

    Jul-11

    Oct-11

    Jan-1

    2

    Apr-12

    Jul-12

    Oct-12

    Jan-1

    3

    Apr-13

    Jul-13

    Credit growth (%) Depos it growth (%)

    27.0

    28.0

    29.0

    30.0

    31.0

    32.0

    72.0

    74.0

    76.0

    78.0

    80.0

    Feb-12

    Mar-12

    Apr-12

    May-12

    Jun-12

    Jul-12

    Aug-12

    Sep-12

    Oct-12

    Nov-12

    Dec-12

    Jan-13

    Feb-13

    Mar-13

    Apr-13

    May-13

    Jun-13

    Jul-13

    Credit/Depos it (%) Investment/Depos it (%) - RHS

    6.0

    7.0

    8.0

    9.0

    10.0

    11.0

    12.0

    13.0

    Aug-12

    Sep-12

    Oct-12

    Nov-12

    Dec-12

    Jan-13

    Feb-13

    Mar-13

    Apr-13

    May-13

    Jun-13

    Jul-13

    Aug-13

    (%) CP 3M CP 12M

    6.0

    7.0

    8.0

    9.0

    10.0

    11.0

    12.0

    Aug-12

    Sep-12

    Oct-12

    Nov-12

    Dec-12

    Jan-13

    Feb-13

    Mar-13

    Apr-13

    May-13

    Jun-13

    Jul-13

    Aug-13

    (%) CD 3M CD 12M

    (2,500)

    (2,000)

    (1,500)

    (1,000)

    (500)

    -

    500

    Sep-12

    Oct-12

    Nov-12

    Dec-12

    Jan-13

    Feb-13

    Mar-13

    Apr-13

    May-13

    Jun-13

    Jul-13

    Aug-13

    (` bn)

    (700)

    (600)

    (500)

    (400)

    (300)

    (200)

    (100)

    -

    Jul-12

    Aug-12

    Sep-12

    Oct-12

    Nov-12

    Dec-12

    Jan-13

    Feb-13

    Mar-13

    Apr-13

    May-13

    Jun-13

    Jul-13

    Aug-13

    (` bn)

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    Exhibit 40:Forex reserves trends

    Source: Bloomberg, Angel Research;

    Exhibit 41:G-Sec yields spread vs. Repo rate

    Source: Bloomberg, Angel Research

    Sectoral and Industry-wise distribution of credit

    Exhibit 42:Industry and Personal loans aids credit growthSector June 2012 June 2013(` cr) % of total (` cr) % of total % chg (yoy)Agriculture 550,808 12.5 605,140 12.1 9.9

    Industry 2,000,577 45.4 2,282,018 45.7 14.1

    - Micro & Small 241,564 5.5 292,753 5.9 21.2

    - Medium 117,787 2.7 132,112 2.6 12.2

    - Large 1,641,226 37.3 1,857,154 37.2 13.2

    Services 1,043,374 23.7 1,169,882 23.4 12.1

    Personal Loans 808,484 18.4 934,773 18.7 15.6

    - Housing 414,357 9.4 484,899 9.7 17.0

    - Vehicle 93,981 2.1 116,705 2.3 24.2

    Non-food Credit 4,403,243 100.0 4,991,813 100.0 13.4Source: RBI, Angel Research

    Exhibit 43:Strong growth in Food processing, Gems & JewelryIndustry June 2012 June 2013(` cr) % of total (` cr) % of total % chg (yoy)Infrastructure 648,830 32.4 772,721 33.9 19.1Metals 266,412 13.3 321,912 14.1 20.8

    Textiles 161,518 8.1 185,150 8.1 14.6

    Engineering 116,531 5.8 133,549 5.9 14.6

    Chemicals 126,885 6.3 148,029 6.5 16.7

    Food Processing 92,796 4.6 124,559 5.5 34.2

    Oil and Gas 62,036 3.1 56,610 2.5 (8.7)

    Construction 49,145 2.5 53,835 2.4 9.5

    Vehicles 56,049 2.8 60,815 2.7 8.5

    Gems & Jewelry 53,608 2.7 68,574 3.0 27.9

    Other Industries 366,766 18.3 356,263 15.6 (2.9)

    Total 2,000,577 100.0 2,282,018 100.0 14.1Source: RBI, Angel Research

    240

    260

    280

    300

    320

    340

    Sep-1

    2

    Sep-1

    2

    Oct-12

    Nov-1

    2

    Nov-1

    2

    Dec-1

    2

    Jan-1

    3

    Feb-1

    3

    Feb-1

    3

    Mar-13

    Apr-13

    Apr-13

    May-1

    3

    Jun-1

    3

    Jun-1

    3

    Jul-13

    Aug-1

    3

    US$ Bns

    0

    2

    4

    6

    8

    10

    (3.00)

    (2.00)

    (1.00)

    -

    1.00

    2.00

    3.00

    4.00

    Oct-05

    Feb-0

    6

    Jul-06

    Dec-0

    6

    May-0

    7

    Oct-07

    Mar-08

    Aug-0

    8

    Jan-0

    9

    Jun-0

    9

    Nov-0

    9

    Apr-10

    Sep-1

    0

    Feb-1

    1

    Jul-11

    Nov-1

    1

    Apr-12

    Sep-1

    2

    Feb-1

    3

    Jul-13

    G sec 1 yr and 10 yr yie ld spread (%) Repo Rate (%) - RHS

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    Valuation watch

    Exhibit 44:Private banks* P/ABV trend

    Source: Company, Angel Research; Note: *Pvt. banks under our coverage

    Exhibit 45:Public sector banks P/ABV trend

    Source: Company, Angel Research

    Exhibit 46:New private* banks P/ABV trend

    Source: Company, Angel Research; Note: *New Pvt. banks under our coverage

    Exhibit 47:Large public sector banks P/ABV trend

    Source: Company, Angel Research

    Exhibit 48:Old private* banks P/ABV trend

    Source: Company, Angel Research; Note: *Old Pvt. banks under our coverage

    Exhibit 49:Mid-cap* public sector banks P/ABV trend

    Source: Company, Angel Research, Note:*Mid and small PSU banks

    0.50

    1.00

    1.50

    2.00

    2.50

    3.00

    3.50

    4.00

    Nov-0

    4

    Jun-0

    5

    Jan-0

    6

    Aug-0

    6

    Mar-07

    Oct-07

    May-0

    8

    Dec-0

    8

    Jul-09

    Feb-1

    0

    Sep-1

    0

    Apr-11

    Nov-1

    1

    Jun-1

    2

    Jan-1

    3

    Aug-1

    3

    P/ABV Median 15th percentile 85th percentile

    0.40

    0.80

    1.20

    1.60

    2.00

    Nov-0

    4

    Apr-05

    Sep-0

    5

    Feb-0

    6

    Jul-06

    Dec-0

    6

    May-0

    7

    Oct-07

    Mar-08

    Aug-0

    8

    Jan-0

    9

    Jun-0

    9

    Nov-0

    9

    Apr-10

    Sep-1

    0

    Feb-1

    1

    Jul-11

    Dec-1

    1

    May-1

    2

    Oct-12

    Mar-13

    Aug-1

    3

    P/ABV Median 15th percentile 85th percentile

    0.50

    1.00

    1.50

    2.00

    2.50

    3.00

    3.50

    4.00

    Nov-0

    4

    Jun-0

    5

    Jan-0

    6

    Aug-0

    6

    Mar-07

    Oct-07

    May-0

    8

    Dec-0

    8

    Jul-09

    Feb-1

    0

    Sep-1

    0

    Apr-11

    Nov-1

    1

    Jun-1

    2

    Jan-1

    3

    Aug-1

    3

    P/ABV Median 15th percentile 85th percentile

    0.60

    0.90

    1.20

    1.50

    1.80

    2.10

    Nov-0

    4

    Apr-05

    Sep-0

    5

    Feb-0

    6

    Jul-06

    Dec-0

    6

    May-0

    7

    Oct-07

    Mar-08

    Aug-0

    8

    Jan-0

    9

    Jun-0

    9

    Nov-0

    9

    Apr-10

    Sep-1

    0

    Feb-1

    1

    Jul-11

    Dec-1

    1

    May-1

    2

    Oct-12

    Mar-13

    Aug-1

    3

    P/ABV Median 15th percentile 85th percentile

    0.30

    0.60

    0.90

    1.20

    1.50

    1.80

    Nov-0

    4

    Apr-05

    Sep-0

    5

    Feb-0

    6

    Jul-06

    Dec-0

    6

    May-0

    7

    Oct-07

    Mar-08

    Aug-0

    8

    Jan-0

    9

    Jun-0

    9

    Nov-0

    9

    Apr-10

    Sep-1

    0

    Feb-1

    1

    Jul-11

    Dec-1

    1

    May-1

    2

    Oct-12

    Mar-13

    Aug-1

    3

    P/ABV Median 15th percentile 85th percentile

    0.30

    0.60

    0.90

    1.20

    1.50

    1.80

    Nov-0

    4

    Apr-05

    Sep-0

    5

    Feb-0

    6

    Jul-06

    Dec-0

    6

    May-0

    7

    Oct-07

    Mar-08

    Aug-0

    8

    Jan-0

    9

    Jun-0

    9

    Nov-0

    9

    Apr-10

    Sep-1

    0

    Feb-1

    1

    Jul-11

    Dec-1

    1

    May-1

    2

    Oct-12

    Mar-13

    Aug-1

    3

    P/ABV Median 15th percentile 85th percentile

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    Economy watch

    Exhibit 50:Quarterly GDP trend

    Source: CSO, Angel Research

    Exhibit 51:IIP trend

    Source: MOSPI, Angel Research

    Exhibit 52:Monthly WPI inflation trend

    Source: MOSPI, Angel Research

    Exhibit 53:Manufacturing and services PMI

    Source: Markit, Angel Research; Note: Level above 50 indicates expansion

    Exhibit 54:Exports and imports growth trends

    Source: Bloomberg, Angel Research

    Exhibit 55:Policy rates - RBI

    Source: Office of the Economic Adviser, Angel Research

    9.3

    7.7

    11.4

    9.5

    8.69.2

    9.9

    7.5

    6.56.0

    5.1 5.4 5.24.7 4.8

    3.0

    4.0

    5.0

    6.0

    7.0

    8.0

    9.0

    10.0

    11.0

    12.0

    2QFY10

    3QFY10

    4QFY10

    1QFY11

    2QFY11

    3QFY11

    4QFY11

    1QFY12

    2QFY12

    3QFY12

    4QFY12

    1QFY13

    2QFY13

    3QFY13

    4QFY13

    (%)

    (0.1)

    2.0

    (0.7)

    8.4

    (1.0) (0.6)

    2.5

    0.6

    3.5

    1.9

    (2.8)(2.2)

    (4.0)

    (2.0)

    -

    2.0

    4.0

    6.0

    8.0

    10.0

    Jul-12

    Aug-1

    2

    Sep-1

    2

    Oct-12

    Nov-1

    2

    Dec-1

    2

    Jan-1

    3

    Feb-1

    3

    Mar-13

    Apr-13

    May-1

    3

    Jun-1

    3

    (%)

    8.17.3 7.2 7.3 7.3 7.3

    5.7

    4.8 4.6 4.9

    5.8

    0.0

    1.0

    2.0

    3.0

    4.0

    5.0

    6.0

    7.0

    8.0

    9.0

    Sep-1

    2

    Oct-12

    Nov-1

    2

    Dec-1

    2

    Jan-1

    3

    Feb-1

    3

    Mar-13

    Apr-13

    May-1

    3

    Jun-1

    3

    Jul-13

    (%)

    46.0

    48.0

    50.0

    52.0

    54.0

    56.0

    58.0

    60.0

    May-1

    2

    Jun-1

    2

    Jul-12

    Aug-1

    2

    Sep-1

    2

    Oct-12

    Nov-1

    2

    Dec-1

    2

    Jan-1

    3

    Feb-1

    3

    Mar-13

    Apr-13

    May-1

    3

    Jun-1

    3

    Jul-13

    Mfg. PMI Services PMI

    (15.0)

    (12.0)

    (9.0)

    (6.0)

    (3.0)

    0.0

    3.0

    6.0

    9.0

    12.0

    15.0

    Aug-1

    2

    Sep-1

    2

    Oct-12

    Nov-1

    2

    Dec-1

    2

    Jan-1

    3

    Feb-1

    3

    Mar-13

    Apr-13

    May-1

    3

    Jun-1

    3

    Jul-13

    Exports yoy growth Imports yoy growth(%)

    3.00

    4.00

    5.00

    6.00

    7.00

    8.00

    9.00

    Aug-12

    Sep-12

    Oct-12

    Oct-12

    Nov-12

    Dec-12

    Dec-12

    Jan-13

    Feb-13

    Feb-13

    Mar-13

    Apr-13

    Apr-13

    May-13

    Jun-13

    Jun-13

    Jul-13

    Aug-13

    Repo rate Reverse Repo rate CRR (%)

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    Banking | Sector Update

    August 28, 2013 25

    Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com

    DISCLAIMERThis document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investmentdecision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make

    such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies

    referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and

    risks of such an investment.

    Angel Broking Pvt. Ltd., its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make

    investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this

    document are those of the analyst, and the company may or may not subscribe to all the views expressed within.

    Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and

    trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's

    fundamentals.

    The information in this document has been printed on the basis of publicly available information, internal data and other reliablesources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as thisdocument is for general guidance only. Angel Broking Pvt. Ltd. or any of its affiliates/ group companies shall not be in any wayresponsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report .Angel Broking Pvt. Ltd. has not independently verified all the information contained within this document. Accordingly, we cannottestify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document.While Angel Broking Pvt. Ltd. endeavours to update on a reasonable basis the information discussed in this material, there may beregulatory, compliance, or other reasons that prevent us from doing so.

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    Angel Broking Pvt. Ltd. and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or

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    Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to thelatest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Pvt. Ltd. and its affiliates may haveinvestment positions in the stocks recommended in this report.

  • 7/30/2019 Banking Sector Update

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    Banking | Sector Update

    August 28, 2013 26

    Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)Reduce (-5% to -15%) Sell (< -15%)

    Note: We have not considered any Exposure below `1 lakh for Angel, its Group companies and Directors

    Disclosure of Interest Statement

    Analyst ownership Angel and its Group companies Angel and its Group companies' Broking relationshipof the stock ownership of the stock Directors ownership of the stock with company covered

    AxisBk No No Yes No

    FedBk No No No No

    HDFCBk No No No No

    ICICIBk No No No No

    SIB No No No No

    YesBk No No No No

    AllBk No No No No

    AndhBk No No No No

    BOB No No No No

    BOI No No No No

    BOM No No No No

    CanBk No No No No

    CentBk No No No No

    CorpBk No No No No

    DenaBk No No No No

    IDBI No No No No

    IndBk No No No No

    IOB No No No No

    J&KBk No No No No

    OBC No No No No

    PNB No No No No

    SBI No No Yes No

    SynBk No No No No

    UcoBk No No No No

    UnionBk No No No No

    UtdBk No No No No

    VijBk No No No No

  • 7/30/2019 Banking Sector Update

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    Banking | Sector Update

    6th Floor, Ackruti Star, Central Road, MIDC, Andheri (E), Mumbai- 400 093. Tel: (022) 39357800

    Research Team

    Fundamental:Sarabjit Kour Nangra VP-Research, Pharmaceutical [email protected]

    Vaibhav Agrawal VP-Research, Banking [email protected]

    Bhavesh Chauhan Sr. Analyst (Metals & Mining) [email protected]

    Viral Shah Sr. Analyst (Infrastructure) [email protected]

    V Srinivasan Analyst (Cement, FMCG) [email protected]

    Yaresh Kothari Analyst (Automobile) [email protected]

    Ankita Somani Analyst (IT, Telecom) [email protected]

    Sourabh Taparia Analyst (Banking) [email protected]

    Bhupali Gursale Economist [email protected]

    Vinay Rachh Research Associate [email protected]

    Amit Patil Research Associate [email protected]

    Twinkle Gosar Research Associate [email protected]

    Tejashwini Kumari Research Associate [email protected]

    Akshay Narang Research Associate [email protected]

    Harshal Patkar Research Associate [email protected]

    Nishant Sharma Research Associate [email protected]

    Technicals:

    Shardul Kulkarni Sr. Technical Analyst [email protected]

    Sameet Chavan Technical Analyst [email protected]

    Sacchitanand Uttekar Technical Analyst [email protected]

    Derivatives:

    Siddarth Bhamre Head - Derivatives [email protected]

    Institutional Sales Team:

    Mayuresh Joshi VP - Institutional Sales [email protected]

    Meenakshi Chavan Dealer [email protected]

    Gaurang Tisani Dealer [email protected]

    Production Team:

    Tejas Vahalia Research Editor [email protected]

    Dilip Patel Production Incharge [email protected]