Angel Broking:: India Banking -Finance Tracker

Visit http://indiaer.blogspot.com/ for complete details �� ��


India Banking
Finance Tracker – Vol. 18/FY11

 Deposits growth marginally up. The latest fortnight, ending 19 Nov
’10, saw an increase in credit & deposits growth rates. Deposits growth
for the fortnight rose yoy, to 15.8% compared with 15.3% yoy growth
the previous fortnight.


 Credit growth rises. The credit growth increased yoy to 22.7% for the
latest fortnight compared with 22% the previous fortnight.
 Deceleration in SLR investments. SLR investments growth
decelerated yoy, to 8.2% for the fortnight ending 19 Nov ’10 from 8.7%
the previous fortnight.
 Additional liquidity-easing measures. To alleviate liquidity pressure,
the RBI has allowed additional liquidity support under its Liquidity
Adjustment Facility (LAF), of up to 2% of NDTL for all scheduled
commercial banks, till 28 Jan ’11.
 Banks to continue lending to Housing and Realty. Despite the
alleged housing finance racket, top bankers have said that they would
continue lending to the housing & realty sectors as the issue is not
systemic. Our channel check suggests that the scam does not pose any
broad-based risk of asset-quality deterioration.
 Life Insurance – New business premium mobilization dips
3.9%yoy. Oct ’10 saw decline in growth (by 3.9% yoy) in new business
premiums (NBP), primarily led by private players (18.7% yoy). LIC
recorded positive growth (5.6% yoy).


Fresh developments

Regulatory changes
Additional liquidity-easing measures
To alleviate liquidity pressure, the RBI has allowed additional liquidity support under its
Liquidity Adjustment Facility (LAF), of up to 2% of NDTL (net demand and time
liabilities) for all scheduled commercial banks, till 28 Jan ’11. Banks may seek waiver of
penal interest on any shortfall in maintenance of statutory liquidity ratio (SLR) arising
from availing LAF.

Business initiatives
Banks to continue lending to housing and realty sectors
Despite the alleged housing finance racket, where the Central Bureau of Investigation
(CBI) arrested the CEO of LIC Housing Finance (LICHF) as well as others, top bankers
have said that they would continue lending to the housing and realty sectors as the issue
is not systemic. Our channel check suggests that the scam does not pose any broadbased
risk of asset-quality deterioration.

Life Insurance – New business premium mobilization dips 3.9%yoy
Oct ’10 saw growth declining (by 3.9% yoy) in new business premiums (NBP), primarily
led by private players (18.7% yoy). LIC recorded positive growth (5.6% yoy). ICICI and
ING Vysya’s NBP saw relatively higher growth yoy of 35.9% and 21.2% respectively.
The major market-share gainer was ICICI (39bp), to 5.2%. Despite LIC’s sturdy 5.6%
yoy growth, it lost market share (67bp) to 72.6%. Most other private insurers saw yoy
decline in NBP, notably SBI (down 46.1% yoy), Birla Sunlife (down 49.2%), Kotak
Mahindra (down 48.7%), Bajaj Allianz (down 24.4%), HDFC (down 18.6%).

In FY10, the industry’s APE growth of 20% yoy was led by the improved equity market
and a favorable ‘base-effect’. We are now cautious on the life insurance sector in the
medium term, after implementation of the new ULIP guidelines. NBAP margins and
growth would depend on the ability of players to manage operating costs and
persistency rates.


Bank of Baroda hikes term deposit rates up to 75 bps
Bank of Baroda increased the interest rate on less-than `10m retail term deposit
schemes up to 75bp. The interest rate on deposits with a maturity period between 271
days and 365 days has been increased 50bp to 6.75%. The maximum hike of 75bp is
effected on deposits with a tenor between 445 days and three years to 8 %.

Union Bank to enter microfinance in Andhra Pradesh
Union Bank of India (UBI) made its maiden foray into micro-credit by lending ~`5m
each to 20 mandals; this is in addition to the Self Help Group (SHG) financing. As per
management, UBI’s total exposure to ~45 micro finance institutions (MFIs) across the
country amounts to ~`2.9bn.

ICICI Bank withdraws teaser home-loan schemes
ICICI Bank has become the first major lender to withdraw teaser home-loan schemes
that were introduced by banks to attract property buyers.

Indian Bank plans to raise `16bn capital
As per media, Indian Bank plans to raise ~`16bn via a follow-on public offer next fiscal.
The proposed fund-raising is aimed at supporting the business target of `5trn by ’15. At
present, the bank’s Tier-I capital is 10.67%.