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Banks
Flash: Deposit maturity analysis
We analyse the proportion of total deposits due for maturity in FY11 (as of March
2010). Of the PSBs under coverage, IDBI Bank and BOB have higher proportion
while PNB and SBI are at the lower end. Among private sector banks under
coverage, Axis Bank is the highest while HDFC Bank is the lowest.
The wholesale borrowing rates as reflected by the one year certificate of deposit rates have
moved up by 80bps over the last one month to 9.3% (+135bps over the last three months;
+365bps yoy).
In general, the retail term deposit rates for one year offered by banks have increased by 100-
125bps over the last three months to about 7.75-8% (+150-175bps yoy).
According to our analysis, among public sector banks (PSBs), IDBI Bank will have highest
proportion of deposits due for maturity in FY11 at 67.8% (28.5% in 2HFY11) followed by Bank
of Baroda at 60.9% (25.1% in 2HFY11).
Further, SBI will have the least proportion of deposits due for maturity in FY11 at 35.8%
(11.2% in 2HFY11) followed by Punjab National Bank at 36.6% (10.2% in 2HFY11).
According to our analysis, among private banks, Axis Bank will have highest proportion of
deposits due for maturity in FY11 at 55.2% (20.1% in 2HFY11), followed by ICICI Bank at
48% (13.7% in 2HFY11) and least being HDFC Bank at 29.2% (8.3% in 2HFY11).
Note, that this data cannot be extrapolated to asses the impact on NIMs as that would also be
a function of lending rates. However, in a tight liquidity scenario, banks with a superior liability
mix partly reflected by the higher proportion of low cost deposits (CASA, current and savings
accounts) will be relatively better compared to peers in terms of protecting the net interest
margins.
We thus re-iterate Buy on SBI (SBIN, trading at 1.8x FY12F adjusted BV and 9.3x FY12F
earnings) and HDFC Bank (HDFCB IN, trading at 3.7x FY12F adjusted BV and 21.4x FY12F
earnings).
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