Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
India Banking & Finance Sector
N PL manageable, but not fully priced in
Reserve Bank of India (RBI) might pause rate hikes, but cuts not in sight
Compared to the start of the previous financial crisis in 2008, inflation is
persistently higher, the government’s fiscal deficit is higher at 5.0% (2.5% in
FY08), and 4.0% of bank loans are restructured (less than 1.0% in 2008). Even if
the RBI pauses on rate hikes in the coming months, it may not make cuts soon.
Non-performing loans (NPL) or restructuring should increase
We estimate around 40% of loans to the power sector (3.2% of total bank loans)
will be restructured or become NPLs by FY13. We assume 35% of outstanding
restructured loans (4% of loans) will relapse by FY13, given weakening
macroeconomic conditions. Overall, we expect those banks with: 1) high power,
textile, commercial real estate, and small and medium enterprise (SME) exposure;
and 2) a greater share of restructured loans to report higher loan loss provisions
(LLP) in FY12-13. We raise our FY13 LLP forecasts for the banks under our
coverage by 5-30%.
Lower earnings estimates around 10%; 6% lower than consensus
We estimate loans will grow 18% YoY over FY12-13 and margins will remain flat
at current levels. We lower our earnings forecasts by 4-12% in FY12 and 6-18% in
FY13 due to our higher LLP estimates and lower credit growth expectation. On
average, our FY13 earnings estimates are 6% below consensus.
Downgrade BOB and PNB to Sell, upgrade HDFC Bank to Buy
We lower our price targets by 3-24%. We downgrade Bank of Baroda (BOB) and
Punjab National Bank (PNB) to Sell, and upgrade HDFC Bank to Buy. We prefer
AXIS Bank (Axis), State Bank of India (SBI), and Federal Bank (Federal). Our
least preferred stocks are BOB, PNB, and Bank of India (BOI).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
India Banking & Finance Sector
N PL manageable, but not fully priced in
Reserve Bank of India (RBI) might pause rate hikes, but cuts not in sight
Compared to the start of the previous financial crisis in 2008, inflation is
persistently higher, the government’s fiscal deficit is higher at 5.0% (2.5% in
FY08), and 4.0% of bank loans are restructured (less than 1.0% in 2008). Even if
the RBI pauses on rate hikes in the coming months, it may not make cuts soon.
Non-performing loans (NPL) or restructuring should increase
We estimate around 40% of loans to the power sector (3.2% of total bank loans)
will be restructured or become NPLs by FY13. We assume 35% of outstanding
restructured loans (4% of loans) will relapse by FY13, given weakening
macroeconomic conditions. Overall, we expect those banks with: 1) high power,
textile, commercial real estate, and small and medium enterprise (SME) exposure;
and 2) a greater share of restructured loans to report higher loan loss provisions
(LLP) in FY12-13. We raise our FY13 LLP forecasts for the banks under our
coverage by 5-30%.
Lower earnings estimates around 10%; 6% lower than consensus
We estimate loans will grow 18% YoY over FY12-13 and margins will remain flat
at current levels. We lower our earnings forecasts by 4-12% in FY12 and 6-18% in
FY13 due to our higher LLP estimates and lower credit growth expectation. On
average, our FY13 earnings estimates are 6% below consensus.
Downgrade BOB and PNB to Sell, upgrade HDFC Bank to Buy
We lower our price targets by 3-24%. We downgrade Bank of Baroda (BOB) and
Punjab National Bank (PNB) to Sell, and upgrade HDFC Bank to Buy. We prefer
AXIS Bank (Axis), State Bank of India (SBI), and Federal Bank (Federal). Our
least preferred stocks are BOB, PNB, and Bank of India (BOI).
No comments:
Post a Comment