UBS, Switzerland's biggest bank, on Tuesday (03 November) posted a bigger than expected year-on-year rise in third-quarter net profit.Net profit for the three months to end-September was 2.1 billion Swiss francs ($2.13 billion), up from 762 million francs a year earlier and ahead of a forecast for 1.758 million francs in a Reuters poll of four analysts.Earnings for the same period last year were hit by the bank setting aside 1.8 billion francs in legal reserves.($1 = 0.9870 Swiss francs)(Reuters)
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Claiming that millions of dollars in illicit funds are flowing out of India, HSBC whistleblower Herve Falciani has said he is willing to "cooperate" with the Indian investigative agencies in their black money probe but would need "protection". Falciani is facing charges in Switzerland of leaking details of bank account holders in Geneva branch of HSBC -- a list which later reached French government that later shared with India the information relating to Indian clients of the bank. Addressing mediapersons through Skype link, Falciani claimed that millions of crores worth illicit funds are flowing out of India. "It is not about money. I don't intend to become rich," Falciani said on Monday when asked whether he is looking for money to share information with India. "We are not here to talk about merely figures but about possible solutions," Falciani said. He stressed that governments should ensure that whistleblowers are protected. "We need just simple protection," he added. "We are not protected... If I am coming to India, I will be arrested," he said, adding that people need to understand that there is no offer of new kind to fight black money. The 43-year-old lives in Divonne, France, a short distance from the Swiss border. As a French national, he cannot be extradited to Switzerland and has said that he would not travel to Switzerland. Falciani has been described as the 'Edward Snowden of tax evasion' after his leaks uncovered the massive tax evasion scandal at HSBC. (Agencies)
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At long last, we have something to cheer about, but there’s still have a long wait ahead before we are out of the woods. The good news first. Moody's Investors Service on Monday upgraded its outlook for our banking system to 'stable' from 'negative' – there’s to be a gradual improvement in the operating environment (for banks) will lead to lesser growth in bad loans in future. The not-so-good bit is while the stock of non-performing loans (NPA) may continue to rise, the pace of new impaired loan formation in the current financial year ending March 2016 will be lower than the levels seen in the past four years – or in effect the run-rate of NPAs will taper off. Moody’s stance today is a reversal of the negative outlook assigned to the Indian banking system four year ago (November 2011). Said the rating agency: “The stable outlook on India's banking system over the next 12-18 months reflects our expectation that the banks' gradually improving operating environment will result in a slower pace of additions to loans problem, leading to more stable impaired loan ratios," Moody's VP & Senior Credit Officer Srikanth Vadlamani said. Moody's, however, said the capital levels of state-run banks are low and the government's announcement to inject Rs 70,000 crore into these banks over the next four years is a "clear positive". It added “But this amount is still short of the banks' overall capital requirements. Ability to access equity capital markets remains key if these banks have to address their capital shortfall," it said, adding high capital levels are a credit strength of private-sector banks. Moody’s expect India's real GDP to grow at 7.5 per cent in the fiscal end-March 2016 and at 7.6 per cent in the next fiscal. “These growth rates would be slightly faster than the 7.4 per cent recorded in fiscal 2015 and substantially better than from fiscal 2013 to fiscal 2014. The Reserve Bank of India will likely maintain its accommodative stance over the outlook horizon, supporting the operating environment for banks”, it noted. What’s the big worry? Indian banks have significantly tightened their underwriting standards, as seen in the sharp slowdown in corporate loan growth to 9.3 per cent over the past three years from 23.1 per cent during 2009-12. That’s a reference to the fact that banks decided to slam the brakes on credit growth as the dud-loan mountain ballooned. Consequently, corporate loans originated since 2013 mostly do not represent a material risk to asset quality, says Moody’s. For loans originated in 2009-12 that are currently under duress, the key issue from an asset-quality perspective is mostly one of recognition of already existing problems, rather than incremental stress in the underlying operating environment. While there has already been a significant recognition of impaired loans, the steel and power sectors in particular will likely see higher levels of new impaired loans. Steelmakers are facing sharp price declines and increased competition from higher imports from China. And here is what has not been taken on board by banks. For the power sector, while 22 per cent of loans were recognised as stressed as of end-December 2014, this percentage largely represented exposures to state distribution companies. “We expect that significant underlying stress in the power generation segment that is not yet reflected in the banks' impaired loan ratios will start to be recognised”. You will come to know of that quantum over the next fortnight!
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Information technology spends by financial institutions is expected to increase by 9.8 per cent to around Rs 50,000 crore in 2015, according to research firm Gartner."Indian banking and securities companies will spend Rs 499 billion (49,900 crore) on IT products and services in 2015, an increase of 9.8 per cent over 2014 spend of 455 billion rupees," it said in a note.This includes spending by financial institutions on internal IT which includes in-house personnel, hardware, software, external IT services and telecommunications, it added."Firms in the industry are investing to strengthen their operational infrastructure to support regulatory needs, as well as sustain increasing demands from the digital channels," its research director Rajesh Kandaswamy said.He added that the upcoming entry of 11 payments banks and 10 small finance banks will also help bolster the spends on the information technology products and services.On the broad areas for the investments, he said the banks will increase investments in digital solutions, modernise back-end systems and increase their reliability and speed.(PTI)
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Moody's Investors Service on Monday (02 November) upgraded its outlook for India's banking system to 'stable' from 'negative' on expectation that a gradual improvement in the operating environment for lenders will lead to lesser growth in bad loans in future.Moody's had assigned a negative outlook to the Indian banking system in November 2011 as it was of the view that the asset quality of the lenders was deteriorating."The stable outlook on India's banking system over the next 12-18 months reflects our expectation that the banks' gradually improving operating environment will result in a slower pace of additions to loans problem, leading to more stable impaired loan ratios," Moody's VP & Senior Credit Officer Srikanth Vadlamani said.In the report titled 'Banking System Outlook India: Gradual Improvement in Operating Environment Drives Stable Outlook', Moody's said the stable outlook is based on Moody's assessment of five drivers - improving operating environment, stable asset risk and capital, stable funding and liquidity.Also stable profitability and efficiency and the government support has supported a stable outlook for the sector, it said adding the recovery in the asset quality would be U-shaped rather than V-shaped, because corporate balance sheets remain highly leveraged.On the operating environment, Moody's expects that India will record the GDP growth of around 7.5 per cent in 2015 and 2016."Growth has been supported by low inflation and the gradual implementation of structural reforms. An accommodative monetary policy should support the growth environment," the report said.As for asset risk and capital, Moody's said that asset quality will stabilise. In particular, while the banks' stock of non-performing loans may continue to rise, the pace of new impaired loan formation in the current financial year ending March 2016 will be lower than the levels seen in the past four years.(PTI)
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Kotak Mahindra Bank Ltd, India's fourth-biggest private sector lender by assets, reported a better-than-expected 28 per cent increase in quarterly profit and a stable bad loan ratio, sending its shares up more than 4 per cent. Kotak Mahindra, which last November agreed to buy smaller rival ING Vysya for $2.4 billion in what was the country's biggest bank takeover, said net profit was Rs 570 crore ($87.5 million) for its fiscal second quarter to September 30 from Rs 445 crore reported a year earlier. Analysts had expected a net profit of Rs 438 crore, according to data compiled by Thomson Reuters. Gross bad loans as a percentage of total loans were 2.35 per cent, compared with 2.31 per cent in the June quarter. The bank said year-ago numbers were not comparable since ING Vysya operations were combined effective April 1 this year. Kotak Mahindra has previously guided for higher credit costs this fiscal year as it makes more provisions related to the acquisition.(Reuters)
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ICICI Bank Ltd, India's top private sector lender by assets, reported a 12 percent increase in quarterly profit due to faster retail loans growth. The bank also said on Friday it agreed to sell a 9 percent stake in its general insurance joint venture to partner Fairfax Financial Holdings Ltd in a deal that would value the venture - ICICI Lombard General Insurance Co Ltd - at $2.6 billion. India's banking sector has been hobbled by slower loan growth and a surge in bad loans as economic growth slowed in the past three years. State-run lenders who dominate the nation's banking system with a more than 70 percent share of loans, also account for bulk of the bad loans estimated at nearly $50 billion. Among the private sector lenders, ICICI, which is also listed in New York, has the highest bad loans in absolute terms. ICICI's gross bad loans as a percentage of total loans were 3.77 percent in the September quarter, compared with 3.68 percent in the previous three months. The bank has previously said it had stepped up monitoring and recovery of bad loans and was reducing concentration of top corporate borrowers. Net profit rose to 30.3 billion rupees ($465 million)for its fiscal second quarter to Sept. 30 from 27.09 billion rupees reported a year earlier, ICICI said in a statement. Analysts on average had expected the lender, categorised by the central bank as one of the two "too big to fail" banks, to report a net profit of 30.24 billion rupees. Net interest income in the September quarter grew 13 percent on year on the back of a 17 percent growth in domestic loans. Retail loans within the total grew at a faster pace of 25 percent from a year ago period. Kotak Mahindra Bank Ltd, India's fourth-biggest private sector lender by assets, earlier on Friday posted a 28 percent increase in quarterly profit and a stable bad loan ratio. (Reuters)
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PNB Housing Finance Ltd has hired banks including Barclays, JPMorgan and Morgan Stanley for a 25 billion rupees (about $385 million) initial public offering, IFR reported on Friday, citing two sources close to transaction. Indian investment banks Kotak and JM Financial will also advise PNB Housing in the planned IPO, slated for the first half of 2016, IFR, a Thomson Reuters publication, said. State-run Punjab National Bank owns a 51 percent stake in PNB Housing, while Carlyle Group owns the remainder.
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