What’s better than the Sensex at 19,000? Well. The Sensex at 25,000! The situation is similar when it comes to the results in the banking sector. Bumper profits last year have ignited hopes of strong results this year as well. This is despite the fact that growth in credit has slowed.
Early results from banks have not disappointed. Profits at private sector HDFC Bank and Axis Bank have risen an unprecedented 40% and 60%, respectively.
HDFC Bank’s rise in profits is more surprising as it comes on the back of a 34% rise in the first quarter. Moreover, the bank has posted a 45% rise in interest income at a time when banks are paying high rates for deposits and not getting enough customers owing to the high lending rates.
Axis Bank has benefited from a surge in non-interest income, or returns from selling insurance and mutual fund products.
banking analyst said, “Both these results are exceptional. HDFC Bank had been sluggish last year (FY07) but it has bounced back this year. Axis has always been doing well. And now with the busy season for loans kicking in, FY08 could be even better.”
Traditionally, the busy season starts with the festivals in October. Corporate India is also known to go into a borrowing overdrive in the last quarter, helping banks to accelerate loan growth and hence profits.
The growth in loan disbursals has been slow so far this year — at 21.9% compared with a 32% growth registered in the same period last year — as the Reserve Bank of India has stepped in with interest rate hikes to curb inflation.
Private sector banks have outperformed their public sector peers in terms of profits for the last few years. However, analysts said banking profits would be much better this year even if PSU banks continue record a modest 18-20% rise in profits.
Ashvin Parekh, partner and national leader, global financial services, Ernst & Young, expects public sector banks to continue the good work in this quarter. “Public sector banks will continue to do well, especially on the low-cost current account savings account (CASA) front. Banking margins will also get a lift because of treasury gains as international interest rates are moving southward after the recent US Federal Reserve interest rate cut.”
An analyst from a private brokerage firm is betting on public sector banks doing well due to treasury income.
“Public sector banks will see huge profits flowing in by way of their treasury income. On the core operations front, Union Bank of India and Bank of India will do well while OBC and Canara Bank may suffer. However, the banking sector as a whole looks positive.”
However, increasing bad loans are a worrying factor, especially for private sector banks.
High interest rates in retail loans have lead to some bad loans, which could take the wind out of the sector.
www.hindu.com
Here’s another asset class where you really don’t need a neural net to tell you the trend is up. All you need is an understanding on how governmental policy drives currency depreciation.
It’s old news now but the EURUSD currency pair traded above $1.43 for the first time (it’s at $1.4280 right now) yesterday. Weak earnings from Bank of America yesterday drove speculation that the Fed would cut interest rates one more time at their Oct 31st meeting.
A weak economic recovery (IMHO), massive deficits, an unpopular war, a misgiuded administration, and a former sellout of a Federal Reserve Chairman, have all contributed to a bleak outlook for the dollar. Sure we’ll have short term fluctuation’s where the USD might strengthen but in the longterm I would remain long the Euro and short the Dollar.
How can a previously low rate of 5.25% (now 4.75%) derail this fantastic economic expansion we are having?
As many securities investors are busy hunting bank shares, they do not realise that securities company’s share prices have soared considerably.
After saying goodbye to the Hanoi Securities Trading Centre on October 29 to list at the HCM City Stock Exchange, Saigon Securities Incorporated (SSI) saw its price increase for one month. SSI was traded at VND160,000/share in August, and the price rose to VND260,000/share on October 12.
Investors pay high for SSI because they believe the company can get high profit when the stock market bounces back at the end of the year. It reported the post tax profit of VND668bil in the first half of the year, though it was the gloomiest period of the stock market.
Bao Viet Securities Company’s share price (BVS) has nearly reached VND600,000/share, an increase of VND120,000/share over the October 2 trading session, remaining the most expensive share item on both Hanoi and HCM City trading floors.
BVS also had very high pre-tax profit in the first 8 months of the year: VND202bil/VND150bil of chartered capital.
Meanwhile, the price of Hai Phong Securities Company’s shares has also unexpectedly soared to VND140,000/share after a long time of staying below VND100,000/share.
The three share items all are the hottest securities items on official trading floors.
Dao Thi Xuan, a freelance securities broker on Nguyen Cong Tru securities market in district 1, HCM City, said that the price increases of securities companies’ shares had been anticipated. Investors well understand that securities companies can make high profit from the warmed up stock market, and it would be wise to bank on these companies.
The warm stock market will bring fat profit to securities companies, as an investor on the market. Moreover, the companies can also pocket big sums of money from transaction fees. SSI, for example, can collect VND2bil worth of fees every day, ACBS VND800mil, while VIS, which has just begun operating, can collect VND200mil.
According to Tran Ngoc Nam, an analyst, investors believe that securities companies’ prices now are very ‘soft’ if compared to the price levels in March 2007, just equal to 50-60%.
However, Bui Ngoc Tuoc, another analyst, has warned that investors should think carefully before injecting money in securities company’s shares. He recalled the story of the Chinese stock market in 2001-2005, when many securities companies went bankrupt when the securities index plunged from 2,245 to 998 points.
He said that only 10 of the 62 licenced securities companies had good business results. Those have earned attractive profit and hold 85% of the market share. It is understandable why some securities items are selling well, while Thien Viet, APEC’s, KBS’s are selling at VND30,000/share only, and APS cannot find investors to buy at VND25,000/share.
via:vietstocknews.blogspot.com
The thing is, the RokR is a bit of a disappointement, what the RazR did a few months ago, the RokR almost undo in just a few week. The RazR was slick and designish, the RockR is bulky and not up to the latest trend (flip phones, trend which has partly been initiated by Motorola themselves).
But worst of all, the RockR is a lameduck music player, transfet rates between your PC and the phone are 20x slower than the Ipod, (by the way, who got the idea to launch it the very same day as the nano???) the storage of 100 songs is less than what early adopters (the target audience) had 5 years ago on their mp3 players, you can't even download songs directly from your phone, and let's face it Nokia, Samsumg et al won't take too long to market better products...
So, MOT Buy, hold, Sell.... I'm going to hold because dividends and future RazR-like model should bring the stock up, along with news from third world country (where Motorola is about to roll out cheap handset to built brand awareness and gain public markets). But if you are like I was a few months ago, wondering whether to buy or not, I would say one thing:
Despite first impression MOT doesn't have a deep moat around its castle
