Banking Weekly Newsletter April 13 2012

7/31/2019 Banking Weekly Newsletter April 13 2012

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EQU ITY | DEBT | ADVISORY

Resurgent India Limited

2

ECONOMIC INDICATORS

IIPfor the month of

Feb12 increased to 4.1

percent

Index of Industrial Production (IIP)

-8

-3

2

7

1217

Apr-10

Jun-10

Aug-10

Oct-10

Dec-10

Feb-11

Apr-11

Jun-11

Aug-11

Oct-11

Dec-11

Feb-12

IIP Manufacturing Mining Electricity

India Economic Snapshot

Indicators Current 1M Prior 3M Prior 1Y Prior

GDP (in %) 6.10 - 6.90 8.30

IIP (in %) 4.10 1.10 5.90 3.60

Inflation (in %) 6.95 6.55 9.11 8.31

Fiscal Deficit (` bn) 586.38 539.21 463.60 528.66

Exports (%,YoY) 4.28 10.10 3.87 49.70

Imports (%,YoY) 20.65 20.25 24.55 21.20

Trade Balance ($ bn) (15.16) (14.76) (13.60) (8.10)

Forex Reserve (` trn) 14.96 14.67 15.51 13.59

Global Economic Snapshot

Indicators US EU UK Japan China Brazil

GDP 3.00 0.70 0.50 (0.20) 8.10 1.37

Inflation 0.40 2.70 3.40 0.20 3.60 5.24

IIP 0.40 (1.80) (2.30) (1.50) 11.90 (3.90)

Leading index 102.00 98.30 98.70 101.90 99.30 93.70

Trad e balance*(bn) (46.00) 5.90 (3.39) (102.10) (5.35) 201.90

*In local currency, China & Brazilin USD

Global Money Market Rates

Countries Rate Name Rate 2Y CDS 5Y CDS 2Y Swaps 6M IBOR

US Fed funds target 0.25 8.13 29.50 0.57 0.73

Germany Refinancing rate 1.00 16.20 70.50 1.02 1.05

UK Prime rate 0.50 11.79 63.50 1.23 1.33

Japan Loan rate 0.10 51.09 99.64 0.35 0.34

China Call rate 6.56 51.97 115.33 4.20 5.07

Global Yield Curve

Yield Curve 3M 6M 1Y 4Y 5Y 10Y

US 0.08 0.13 0.17 0.68 0.94 2.01

Germany 0.11 0.09 0.08 0.41 0.68 1.75

UK 0.36 0.41 0.43 0.70 0.93 2.05

Hong Kong 0.12 0.14 0.16 0.42 0.55 1.22

Japan 0.10 0.10 0.11 0.20 0.30 0.95

Gold & Dollar Index

1440

1520

1600

1680

1760

1840

1920

1-Feb

14-Feb

28-Feb

12-Mar

23-Mar

9-Apr

73

75

77

79

81

83

Gold ($/oz.) Dollar index

Commodities Snapshot

Indicators Current 5D (%) 1M (%) 3M (%)

Gold ($/oz.) 1673 .90 2.70 (1.34) 2.29

Silver ($/oz) 32.27 1.86 (3.76) 9.30

Nickel ($/T) 18500 3.61 (4.88) (5.61)

Copper ($/T) 8095 (3.05) (5.41) 1.19

Zinc ($/T) 2008 1.41 (4.79) 2.53

Aluminum ($ /T) 2092 (0 .06) (7.38) (2.48)

Lead ($/T) 2073 .00 3.01 (3.76) 3.06

Crude (USD/bbl) 103.21 (0.08) (3.74) 3.84

Natural Gas($/mmbtu) 1.98 (5.27) (1 7.82) (30.97)


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3

INDIA MONEY MARKET INDICATORS

Yield on 10Y G-Sec and

364D T-Bills decreased

Yield on both 3M CD

and3MCPdecreased

10Y G-Sec & 364D T-Bills

7.1

7.4

7.7

8

8.3

8.68.9

Jan-11

Feb-11

Mar-11

Apr-11

May-11

Jun-11

Jul-11

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

7.9

8.1

8.3

8.5

8.7

8.9

9.1

364 D T-Bills (LHS) 10 Y G-Sec Yield (RHS)

3M CD & 3M CP Rates

7

8

9

10

1112

Jan-11

Feb-11

Mar-11

Apr-11

May-11

Jun-11

Jul-11

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

CD 3M Rates CP 3M Rates

Call rate stabilized

yield on 3M T-Bills

decreased

Net Borrowings have

increased

Call Rates and 3M T-Bills

5

5.7

6.4

7.1

7.8

8.5

9.2

9.9

10.6

11.3

12

Feb-11

Apr-11

Jun-11

Aug-11

Oct-11

Dec-11

Feb-12

Apr-12

6.87.17.47.788.38.68.99.29.59.810.1

Call Rates 3 M T-Bills

Repo, Reverse Repo, Net Borrowing

5.0

6.0

7.0

8.0

9.0

10.0

Apr-11

Jun-11

Aug-11

Oct-11

Dec-11

Feb-12

Apr-12

-2500

-2000

-1500

-1000

-500

0

500

1000

1500

Net Borrowings (Rs bln) Repo Rate

Revesre Repo Rate

Money Market Rates

Key Rates Current 5D Prior 1M Prior 3M Prior 6M Prior 1Y Prior

Call RateIndi cative 8.85 8.95 8.80 9.50 8.30 6.85

LIBOR 3M 0.47 0.47 0.47 0.57 0.40 0.28

MIBOR 3M 10.27 10.82 10.90 9.74 9.38 8.90

MIFOR 3M 8.34 8.17 8.97 8.27 4.95 7.68

3M T-Bills 9.19 8.79 8.93 8.47 8.45 7.15

10Y G-Sec Yield 8.57 8.78 8.33 8.21 8.72 8.00

INDIA CURRENCY MARKET INDICATORS

INR Relative Performance

-20

-10

0

10

20

30

40

50

Jan

-10

Mar-10

May

-10

Jul-10

Sep

-10

Nov

-10

Jan

-11

Mar-11

May

-11

Jul-11

Sep

-11

Nov

-11

Jan

-12

Mar-12

USDINR EURINR GBPINR JPYINR

Currency Rates

Major Currencies LTP 5D (%) 1M (%)

USD/INR 51.4950 (0.72) (2.99)

EUR/INR 67.7550 (0.78) (3.34)

JPY/INR 0.6359 (1.51) (5.46)

GBP/INR 82.0229 (1.22) (4.70)

EUR/USD 1.3159 0.48 0.57

USD/JPY 80.9700 0.86 2.47

GBP/USD 1.5928 0.40 1.46

USD/CHF 0.9133 0.46 1.10

AUD/USD 1.0400 0.91 (1.44)

USD/CAD 0.9941 0.31 (0.55)


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4

INDIA BANKING INDICATORS

Depositincreased to

`59.05 trillion along

with the yearlydeposit

growth to 10.94%

CASA ratio stood at

12.11 registering a

growth of 32.85 % on a

y-o-y basis

Deposit And Deposit Growth

38

41

44

47

50

53

56

59

Apr-09

Jul-09

Oct-09

Jan-10

Apr-10

Jul-10

Oct-10

Jan-11

Apr-11

Jul-11

Oct-11

Jan-12

intrillions(Rs.)

8

10

12

14

16

1820

22

Deposits Growth %

CASA And CASA Growth

9

10

11

12

1314

15

Jun-09

Sep-09

Dec-09

Mar-10

Jun-10

Sep-10

Dec-10

Mar-11

Jun-11

Sep-11

Dec-11

Mar-12

-20-15-10-5051015202530

CASA Ratio Growth %

Creditincreased to

`47.05 trillion with a y-

o-y growth rate at

17.57%

Food credithas

decreased to`80 billion

while non-food credit

increased to `46.25

trillion

Credit And Credit Growth

2729313335373941434547

Jun-09

Sep-09

Dec-09

Mar-10

Jun-10

Sep-10

Dec-10

Mar-11

Jun-11

Sep-11

Dec-11

Mar-12

intrillions

(Rs.)

8

11

14

17

20

23

26

Bank Credit Growth %

Food And Non-Food Credit

0.350.400.450.500.550.600.650.700.750.800.85

Jun-09

Sep-09

Dec-09

Mar-10

Jun-10

Sep-10

Dec-10

Mar-11

Jun-11

Sep-11

Dec-11

Mar-12

intrillions

(Rs.)

25.027.530.0

32.535.037.540.042.545.0

(intrillions

(Rs.)

Food Credit Non Food Credit

Cash-deposit ratio

increased to 6.32%

Investment-deposit

ratio decreased to

28.55%

Cash-Deposit Ratio

5.0

5.5

6.0

6.5

7.0

7.5

8.0

Jan-11

Feb-11

Mar-11

Apr-11

May-11

Jun-11

Jul-11

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Cash-Deposit Ratio

Inv-Deposit Ratio

28

29

30

31

32

33

34

Jan-11

Feb-11

Mar-11

Apr-11

May-11

Jun-11

Jul-11

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Investment-Deposit ratio

Banking Snapshot

Indicators Current 15D Prior 1M Prior 3M Prior 6M Prior 1Y Prior

M3(` trn) 65.04 72.83 72.44 71.99 68.59 65.00

Total D eposits (`trn) 61.12 58.53 58.15 58.28 55.30 52.05

Demand D eposits (` trn) 7.40 5.99 5.96 6.38 5.59 6.39

Time Deposits (` trn) 53.73 52 .54 52.19 51.89 49.71 45.66

Total Credit (` trn) 47.05 44.87 44.08 43.66 40.93 39.39

Non-Food Credit (` trn) 46.25 44.03 43.24 42.81 40.25 38.74

Credit-Deposit Ratio 76.97 76.65 75.79 74.91 74.01 75.68

Cash-Deposit Ratio 6.32 5.95 5.99 6.66 6.98 6.71

Investment-Deposit Ratio 28.55 30.16 30.01 29.06 30.74 28.82


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5

INDIA BANKING MONITOR

Banking News

Oriental Bank of Commerce cuts base rate by 10 bpsTaking the lead, Oriental Bank of Commerce has cut its baserate by 10 basis points to 10.65 per cent. This move is

expected to translate into lower interest rate for borrowers,

and comes a week ahead of the Reserve Bank of India's

annual credit policy announcement on April 17. We have

taken a bold decision ahead of the RBI policy. There are

some events in the last few months that have enabled us to

take this decision and pass on the cost benefit to our

customers, Mr S. L.Bansal, Chairman and Managing

Director, said.

Nationalised banks to speed up processing of corporateloans

Indian companies can hope for a faster turnaround when

they submit loan proposals to nationalised banks.

Nationalised banks have set up credit approval committees(CACs) at their respective head-offices to speed up decisions

on loan requests from companies. Realising that private

sector and foreign banks have a competitive edge when it

comes to decision making on loans, the Finance Ministry

has pushed for a CAC in each of the 20 nationalised banks.

IOB eyes 1618% credit growth in FY13Public sector lender, India Overseas Bank, on Wednesday

said it is aiming a credit growth rate of 16 to 18 per cent

and a deposit growth rate of 18 to 20 per cent in the

current financial year. Total deposit of banks grew by 13.4

percent to ` 60.72 trillion as of March 23, which is below

the RBIs projection of 17 percent for the last fiscal. Net

profit of the bank fell by 53 per cent to ` 108 crore during

the third quarter owing to higher provisioning and rise inrestructured assets.

New strategy for loss-making branches l ikelyOperations of loss-making branches of public sector banks

and insurance companies may be scaled down, Mr D. K.

Mittal, Financial Services Secretary, has indicated. This is

part of an ongoing dialogue with not only banks, but also

insurance companies. If there are loss-making branches,

then we have to re-look them. Ultimately, branches have

been set up to earn, Mr Mittal told newspersons at a

Confederation of Indian Industry event in the Capital. He

said that the Government was open to the idea of working

out a new business strategy, relocating branches and maybe

even scaling down staff.

Dhanlaxmi Bank to grow gold loan businessBanks are likely to gain from the restrictions imposed on

gold loan companies by the Reserve Bank of India. In fact,

old generation private sector bank, Dhanlaxmi Bank is

looking to increase its gold loan portfolio from 8 per cent of

total loans to 20-25 per cent in the current financial year,

said Mr P. G. Jayakumar, Chief Executive Officer. The bank's

gold loan portfolio is expected to increase from ` 750 crore

as at March-end 2012 to ` 2,500 crore by March-end 2013.

PNB targets ` 13,000-cr business turnover in KeralaThe public sector Punjab National Bank is targeting a

business turnover of ` 13,000 crore in Kerala during the

financial year of 2012-13. Mr K.V. Rajesh, deputy general

manager and circle head told that during last financial year

the bank had garnered a business volume of` 10,000 crore

in the State.

Base Rates & Deposit Rates

Banks Base Rate Deposit Rate (in %)

3 Years 5 Years

Public Sector

Allahabad Bank 10.75 8.75 8.50

Andhra Bank 10.75 9.40 9.00

Bank Of B aroda 10.75 9.25 9.00

Bank of India 10.75 9.25 9.25

Bank of Maharastra 10.60 9.35 9.00

Canara Bank 10.75 9.25 9.25

Central Bank of India 10.75 9.25 9.09

Corporation Bank 10.65 9.25 9.25

Dena Bank 10.70 9.30 8.75

IDBI Bank 10.75 9.50 9.50

Indian Bank 10.75 9.00 9.00

Indian Overseas Bank 10.75 9.25 9.00

OBC 10.65 9.25 9.25

Punjab & Sind Bank 10.75 9.25 9.25

Punjab National Bank 10.75 9.25 9.00

State Bank Of India 10.00 9.25 9.25

Syndicate Bank 10.75 9.25 9.25

UCO Bank 10.75 9.25 9.25

Union Bank of India 10.65 9.25 9.40

United Bank Of India 10.60 9.35 9.35

Vijaya Bank 10.65 9.30 9.25

Private Sector

Axis Bank 10.00 9.25 8.75

Kotak Bank 10.00 9.25 9.00

ICICI Bank 10.00 9.25 8.75

HDFC Bank 10.00 9.25 9.25

Karnataka Bank 11.00 9.50 9.50

Dhanlaxmi Bank 11.25 8.75 10.10

Federal Bank 10.65 9.25 9.25

IndusInd Bank 10.75 8.75 8.75

Yes Bank 10.50 8.75 8.75

Foreign

RBS 10.00 7.75 7.75

DBS India 10.00 8.75 9.00

* Figures in bold indicatesa change in the previous week with bpsch ange in parenthesis

Government Auctions Completed

Date of Issuance Security Amount Yield (in %)

Apr 11 91 D T-Bills ` 9000 cr 8.7712

Apr 11 182 D T-Bills ` 5000 cr 8.5741

Forthcoming Government Auctions

Date of Issuance Security Amount Yield (in %)

Apr 18 91 D T-Bills ` 9000 cr -

Apr 18 364 D T-Bills ` 5000 cr -
http://www.thehindubusinessline.com/industry-and-economy/banking/article2805680.ecehttp://www.thehindubusinessline.com/industry-and-economy/banking/article2805680.ece


6/7



6

ARTICLES WORTH A READ

Italian politics: Jittery Italy Source: economist.comCOLD winds blew through Italy this week, and clouds obscured the unseasonably blue skies under which the country had long

been basking. Politically and economically, too, the outlook has changed. On April 10th the Milan bourses index dived by 5%.

Markets fell elsewhere in Europe, but the drop in Milan was the biggest, reflecting among other things fears that Italys banks,which bought more than 50 billion ($65 billion) of government bonds during the winter, are perilously exposed to renewed

panic in the debt markets.

The same day saw the yield spread between Italian and German benchmark bonds exceed four percentage points for the first

time since January That is not all bad news for Mario Monti, Italys prime minister. Last year, fear of a crisis that could force

Italy to default on its vast public debts (worth more than 120% of GDP) cemented an unlikely alliance between the three big

parties, giving Mr Montis government a solid parliamentary majority. Of late, that alliance has needed extra glue.

The centrepiece of Mr Montis legislative programme is a reform of Italys notoriously restrictive labour laws, which help to

produce a woefully low employment rate (see chart). The bill, which began its parliamentary journey this week, has been

rejected outright by Italys biggest trade-union federation, the CGIL. That stance has put the leaders of the centre -left

Democratic Party (PD) between the rock of their historic ties to organised labour and the hard place of support for the

government.

To ease their pain, the government said on April 4th that one of the most fiercely contested parts of the bill would be watered

down: judges will retain the power to order reinstatement (and not just compensation) for workers . That prompted bitter

criticism from the employers leader, Emma Marcegaglia. Mr Monti in turn criticised he r for adding to the fear in the markets.

That was unfair. If anything in Italy had fostered alarm, it was Mr Montis concession on labour reform. But the change may

nevertheless have been worth making. If tensions between the PD and its main rival, the People of Freedom party, can be kept

within limits and their unnatural alliance extended, Mr Monti will have bought his government time; it may even survive until

next years election. Amid macroeconomic uncertainty, political stability is no small prize.

That has been even truer since April 5th, when Umberto Bossi resigned as head of the Northern League, the regionalist -cum-

separatist movement he founded in 1991, which held the balance of power until the fall of Silvio Berlusconis government last

year. The end of Mr Bossi s autocratic reign came amid claims by prosecutors that taxpayers money allotted to his party had

been spent on its leader, his family and his closest associates (none of whom is under investigation, and all of whom deny

wrongdoing).

The Leagues treasurer is being investigated (on suspicion of fraud, embezzlement and money-laundering); he also denies

wrongdoing. The scandal is unlikely to go away. Among other things, prosecutors are looking into alleged links between League

officials and mobsters from southern Italy, and a string of puzzling overseas investments, including one in Tanzania. This is

acutely embarrassing to a party that has always prided itself on its decency, and which aspires to cut northern Italy off from the

crime and corruption in the south.

The Leagues troubles, which could yet escalate into a party split, might help Mr Monti, as the party is his fiercest critic. But

tremors that shake Italys political landscape seldom come singly. This one could be an isolated jolt. Or it could be the prelude

to an earthquake on the right.


7/7



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Banking Weekly Newsletter April 13 2012