Are Indian banks camouflaging NPA ? Case Study 3

Indian Bank's NPA Reduction is largely on account of technical write offs?

Gross NPAs opg.	5670.44	5815.15
Fresh NPAs	496.36	547.04
Reduction	351.65	589.41
Gross NPA closing	5815.15	5772.78
Gross advances	124998.32	125291.64
Gross NPA as % to GA	4.65%	4.61%
Cash /comp. recovery	122.95	222.85
Upgradation	47.59	6.53
Tech. write off/write off/Exch.diff.	181.11	360.03

 http://www.indian-bank.com/pdfs/fin/sep15/PresentationonPerformanceoftheBank30092015

Q2 15-16: Case Study of DENA Bank        

Gross NPAs Rs In Crores	5,282.62
Gross Credit	77,204.38
Gross NPA as % of Gross Advances	6.84
Net NPA	3,493.45
Net NPA as % of Net Advances	4.65
Slippage into NPA  Advances  during half year 2015 Rs In Crores	1,540.91

Total Restructured Assets position as on 30.09.2015

Amount  Rs Crores

10,379.56

http://www.denabank.com//uploads/files/1448100424077-Analyst%20PPT_FinalFinalRevisedRevised2pm_Sept15.pdf

This blog recommends no investment or divestment. Views expressed here are without any risk or responsibility. 

Are Indian banks camouflaging NPA ? Case Study 2

Q2 15-16: Case Study of Central Bank of India    

Gross NPAs Rs In Crores	13358
Gross Credit	194594
Gross NPA as % of Gross Advances	6.86
Net Advances  Rs In Crores	187607
Net NPA	7193
Net NPA as % of Net Advances	3.83

Total Restructured Assets position as on 30.09.2015

	No. of Accounts		Amount  Rs Crores
below 1 crore	29160		929
above 1 crore	231		27444
Total No. of accounts	29391		28373

Source: https://www.centralbankofindia.co.in/upload/Presentation%20to%20Analysts%2030th%20September%202015.pdf

This blog recommends no investment or divestment. Views expressed here are without any risk or responsibility. 

Why Indian investors sell bank stocks: A Case Study

Reuters has a telling article which says that Indian banks are camouflaging bad loans. ("As India's Rajan tightens screws, banks can still disguise bad debts" dated 9th December 2015)

It states that $ 110 billion is the quantum of stressed assets ; and down the line, Indian banks have to make provisions for these assets which will impact not just bottomlines (read losses )  but also its functional abilities.  A case study of Bank of India is a pointer to the dismal functioning of a public sector bank (see http://www.bankofindia.co.in/UserFiles/File/Q2-FY16-PRESENTATION-30092015-ED-SIR-Copy.pdf) :

Operating Profit (Q2) Rs. Crs 1,458 -31.74%  (YOY)
Net Profit/Loss (Q2) Rs. Crs -1126 -162.63%  (YOY)
Gross NPA Rs. Crs  29,894 - % to Advances 7.55%
Net NPA Rs. Crs 16,466 - % to Advances 4.31% 


TOTAL RESTRUCTURED PORTFOLIO (DOMESTIC)
Rs. Crs 30,209 Of Which
Rs. Crs Standard 18,678
Rs. Crs  NPA 11,531

Slippages to NPA  during quarters this year 
March Q     Rs. Crs  6,547 
June Q        Rs. Crs  6,535 
September  Rs. Crs 6,251  

Why should the taxpayer fund inefficiency? 

This blog recommends no investment or divestment. Views expressed here are without any risk or responsibility. 

Listless December

Except for the Fed news there is not much that December can offer. As traders prepare to go home for December holidays, it would be square positions that they  would like to have. The real impact of a crisis as and when the Fed rises rates will be on emerging economy currencies and that will be one time fall on that date as the market has already factored in such a fall. All that remains to sell would be  the last hopefuls; others may have or would have rationally  planned their exits.

The fall on Mumbai Stock Exchange is on expected lines: there is nothing great about the Indian economy with the bickering politicians holding up reforms. India may try but cannot seem to go beyond its 7 to 7.5  % growth rate despite all the macho talk. Its banks seem to be  in a bad shape and market is giving up hope on the ability of banks to cope with stressed assets. India's  biggest metro in the South Chennai has been a flood wash out and it is only the private sector that seems to be  of utility. The administrative services are nowhere to be seen,  forget felt. If this is the type of 'governance efficiency' that one displays, FIIs will and should sell. Speeches do not substitute  for diligent hard work. India's leaders have to realize that it is looking south !!!

Time to hold on to one's dollars.  With oil plunging, commodity markets will drag down.

Views expressed are without any risk or responsibility. This blog recommends no investment. 

Deutsche Bank: Fear is the key?

Deutsche has adopted divestment as a turnaround strategy. In its attempt to swim back on tired waters to its core business, (but are not Germans proponents of Universal banking?) the bank seeks to shed businesses that are risky. This is understandable as a strategy but why does it have to be that Deutsche lets go of $50 billion of high net worth and ultra high net worth USA customers to Raymond James? Deutsche Bank had agreed to sell its U.S. private client services unit to Florida based Raymond James in an effort , presumably to save on costs and hive off non-core businesses. 

What is surprising is that Deutsche is retracing from USA which is the fastest growing and perhaps the wealthiest of  advanced economies. (California,   130 billionaires;  New York City about 75 billionaires; Florida about 77 billionaires), One can understand if Deutsche scales back from the 

'high risk' economies like Russia but its decision to selectively withdraw from USA  customers is enigmatic. What is banking without the wealthy?

Or is it that in Deutsche's haben (credit)  and soll (debit) corridors, fear is the key?

This blog recommends no investment; all views expressed are without any risk or responsibility. 

Letting go of emerging market economy assets

1. The days of forays into high risk high reward may be over. As the US economy seems to be on a reassuring path, it makes sense for investors to return to advanced economies.

2. Japan’s public pension reserve fund, Pension Investment Fund reportedly  lost 7.89 trillion yen ($64.22 billion) in the three months to September, or 5.59%, bringing the value of its total assets to ¥135.1 trillion.  This is a consequence of global sell offs. Against this background, investors should b happy to scramble away from a China triggered ebb in asset values , away from the emerging market assets to  the developed markets in a flight to quality.

3. Janet Yellen's two back to back speeches will be heard or read for the 'little said, the vast unsaid.' No central banker will speak before the policy meet and lead markets to a decision. However, the Fed has been fairly transparent in its hints.  Data seems to suggest a hike is due sooner than later. Global situation may have stabilized a bit for the Fed to keep moving on its call.

4. In the initial round, economies like Japan would be affected if emerging economies are affected. Advanced economies have factored all this probable tumult in the wake of a rate hike. Bank of Japan already has plans afoot to absorb such an impact. Australia's Reserve Bank says that new opportunities for growth will have emerged, resulting from things like the growth in the middle class of Asia, and the growth of India is a potential opportunity for Australia. European Central Bank's QE seems to be yielding positive results.

In the long run, investors may prefer advanced economic environments. All happy families resemble one another; every unhappy family is unhappy in its own way. Leo Tolstoy   

5. Looks like USD is set for for more highs. The Canadian and Australian Dollars might give good company. Emerging economy currencies seem destined to fall. 

This blog recommends no investment. All views expressed are without any risk or responsibility. 

Only cosmetic management at Deutsche Bank?

Source: http//www.ft.com/intl/cms caption

FT reports that Deutsche created tax avoidance strategies...

It may be technically right to have instruments like profit participating instruments where profits are shared by the bank and the participant client. The latter is motivated to bank with Deutsche to re-route money to avoid tax. 
The moot point is: Can banks have a persistent 'passion to perform' through  illegal or  by smart 'legality circumventing instruments'. Shareholders need to question  the source of the bank's profits. Exploiting a weak and developing economy like Brazil is as much a drain of wealth as a colonial pilferage. 

Creative accounting practices must be looked into by the Deutsche bank's home regulators. 

The views expressed here are without any risk or responsibility. The blog  recommends no investment or disinvestment.