The 2% Ledger

[sridhga]

https://www.japantimes.co.jp/news/2020/07/15/business/corporate-business/us-banks-bad-loans/

https://in.reuters.com/article/us-h...uild-up-from-coronavirus-crisis-idUSKCN2232NF

https://in.reuters.com/article/us-h...uild-up-from-coronavirus-crisis-idUSKCN2232NF

https://www.bloombergquint.com/busi...highest-bad-loan-costs-since-financial-crisis

https://internationalfinance.com/coronavirus-southeast-asian-banks-face-surge-bad-loans/

https://www.business-standard.com/a...d-loans-rise-due-to-covid-120083000575_1.html

https://economictimes.indiatimes.co...to-covid-19/articleshow/76811582.cms?from=mdr


https://qz.com/india/1900272/indian-banks-bad-loans-will-be-much-worse-than-provisioning/


World wide there is a problem here.
But our banks raised funds during the pandemic using QIP route and should that not help in better capitalization and ability to expand business?

Moreover loan moratorium should have cushioned small borrowers for 6 months. Is it not? Most banks that matter for Bank Nifty have raised their additional funds from the market. This should give scope for business expansion and cushion losses. Is it not?

https://economictimes.indiatimes.co...ver-bad-debt-pile-up/articleshow/77734689.cms

 

[sridhga]

https://www.citigroup.com/citi/news/2020/third-quarter-2020-earnings.htm#:~:text=New York – Citigroup Inc.,for the third quarter 2019.

https://www.smfg.co.jp/english/investor/financial/latest_statement/fy2020/fy2020_1q_e01.pdf

https://www.db.com/ir/en/download/Release_Q3_2020_results.pdf

https://www.jpmorganchase.com/conte...rter/853d4e76-cb08-43b6-8f59-bc8ddd5ed8a8.pdf

https://www.usbank.com/newsroom/stories/us-bancorp-reports-second-quarter-2020-results.html

Globally the quarterly results have been mixed. But most large banks seem to have handled the situation by raising capital and/ or managing better on other income.
The same is the situation in India. The top 4 banks have large FII investments. If they did not provide adequately, they would not have been spared by their large investors. This is not 2015 when Axis Bank and ICICI Bank could hide their bad debts.

Just the top 5 banks really matter for Bank Nifty.
I am rather more worried about profit booking by investors after the result dates. This has dragged the index down.

 

[siddhant4u]

loans have to paid. Morat is temporary measure. If people have jobs and are getting similar salary, no reason for them to stop paying EMIs. Look at outside, check with people. If 10% of them are getting pay cut, 5% lost jobs, that's 15% not able to take fresh loan or spend as they use to earlier.

That's for Job people. Now what about small shops who rely on seasonal sell to earn year's profit? Whole year all season are washed out! No sell for school stationary, uniforms, shoes, etc! No ganesh festival or Navratra means low sell in garments industry. Now trickle down this effect and you see that most of them are not going to have any money for next whole year.

 

[sridhga]

BBVA is Spain's 2nd largest bank. It has presence in parts of Latin America and Turkey as well. Their quarterly report suggests it is recovering in 3rd quarter. Page 21 of the report also suggests that European Central Bank has relaxed Capital adequacy norms for European banks.
So Central Banks globally have adjusted their reporting requirements in wake of the virus.

https://shareholdersandinvestors.bb...s/2020/10/301020InformeResultados3Q20_Eng.pdf


Here we have IndusInd Bank which is a part of Bank Nifty. In addition to the poor result, the management's assessment does not evoke confidence.
This bank may not have high weightage in the Bank Nifty, but can act as a sentiment spoiler.

https://www.livemint.com/companies/...ovisions-more-than-double-11604059308788.html

 

[sridhga]

https://www.financialexpress.com/ma...to-know-about-ant-group-public-issue/2117904/


If we fall behind this is what happens. The subscription is more than India's GDP. It is to be listed only on HK and Shanghai.

 

[siddhant4u]

Here is what coming next for psu banks

 

[sridhga]

Here is what coming next for psu banks
View attachment 44794

PSU Banks are anyways doomed. They will slowly lose their importance and fade into oblivion. Will India lose anything? Not really. Private banks are expanding to fill that gap. Look at Air India and BSNL for examples.
We trade in Bank Nifty. Bank Nifty is already loaded with private banks. So Bank Nifty will do well in the long run.

 

[timepass]

PSU Banks are anyways doomed. They will slowly lose their importance and fade into oblivion. Will India lose anything? Not really. Private banks are expanding to fill that gap. Look at Air India and BSNL for examples.
We trade in Bank Nifty. Bank Nifty is already loaded with private banks. So Bank Nifty will do well in the long run.

Yes, my thoughts exactly. The same for all the PSUs.

 

[siddhant4u]

PSU Banks are anyways doomed. They will slowly lose their importance and fade into oblivion. Will India lose anything? Not really. Private banks are expanding to fill that gap. Look at Air India and BSNL for examples.
We trade in Bank Nifty. Bank Nifty is already loaded with private banks. So Bank Nifty will do well in the long run.

unfortunately Govts will keep pumping tax payers money in to PSUs. in last 6 years govt of india has pumped 3.5 lakh cr !! this recapitalization did nothing good. So if banks going down due to NPA, more good money will go down the drain too

In this year's budget, 20,000 cr (2.5 bill $ roughly) is for recapitalization. My guess is , PNB will need this whole amount for itself !!

 

[siddhant4u]

SBI Loan book under Moratorium is 8.5 Trillion Rs !! I seriously start to think private banks are hiding something... it came out in public quite late for Yes Bank, we might see more public and private banks failing (in next 1 or 2 years)...

India has rotten financial sector and it was never cured.