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Amazon denies any plans to accept Bitcoin as payments, but shows interest in cryptocurrency, BFSI News, ET BFSI

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NEW YORK: Amazon on Monday denied a report that the e-commerce giant planned to begin accepting Bitcoin payments by the end of this year, but acknowledged an interest in cryptocurrency.

City AM cited as unnamed insider as saying Amazon would start taking cryptocurrency, citing a recent job posting by the company for someone with digital currency and blockchain skills.

Contacted by AFP, an Amazon spokesperson said information in the story was “fabricated,” but that the company does have its eyes on the cryptocurrency sector.

“Not withstanding our interest in the space, the speculation that has ensued around our specific plans for cryptocurrencies is not true,” the spokesperson said.

“We remain focused on what this could look like for customers shopping on Amazon.”

Cryptocurrency values climbed on speculation that it might be accepted for Amazon purchases.

“We’re inspired by the innovation happening in the cryptocurrency space and are exploring what this could look like at Amazon,” the spokesperson said.

“We believe the future will be built on new technologies that enable modern, fast, and inexpensive payments, and hope to bring that future to Amazon customers as soon as possible.”

After dipping from early May to mid-July, Bitcoin briefly rose above $40,000 on Monday before losing ground. It was trading at $37,209 about 2300 GMT on Monday.

The cryptocurrency sector is known as a bit of a roller coaster ride for investors, and is being watched warily by authorities and regulators concerned about its lack of transparency.

Backlash by governments caused Facebook to scale back plans unveiled in 2019 for a global cryptocurrency called “Libra.”

The project, entrusted to an independent association, has shifted to fielding “Diem” stablecoins, a type of cryptocurrency whose value is based on select real-world currencies.

Amazon handles hundreds of billions of dollars in transactions annually, making it a huge marketplace for cryptocurrency to make a debut as legal tender.



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UK digital bank Starling buys lender Fleet Mortgages, BFSI News, ET BFSI

Banking & Finance

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British digital bank Starling said on Monday it has acquired specialist buy-to-let mortgage lender Fleet Mortgages in a 50 million pound ($68.93 million) cash and share deal.

Starling said the deal was part of a wider plan to expand lending, including through further mergers and acquisitions.

Fleet Mortgages – which has around 1.75 billion pounds of mortgages under management – will retain its brand and management team.

“The acquisition of Fleet Mortgages is the start of our move into mortgages as an asset class,” Starling CEO Anne Boden said.

The takeover comes days after Starling said it was on track for full-year profitability after narrowing its losses, and confirmed it could float on the stock market as soon as next year.

Launched in 2017, Starling is one of Britain’s most prominent financial technology companies and has fared better than some of its peers by expanding its business lending through state-backed pandemic schemes.

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Franklin Templeton MF: SC says SAT direction of ₹250-crore deposit is ‘fair’

Banking & Finance

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The Supreme Court has allowed Franklin Templeton Mutual Fund (FTMF) to deposit ₹250 crore into an escrow account instead of ₹512 crore as earlier directed by SEBI.

In June, the market regulator had asked FTMF to return nearly ₹512 crore it had collected as management and advisory fees since June 2018 on its six debt schemes that were shut down last year. Further, SEBI had banned the fund from launching any new debt schemes for two years.

Debt MFs: SEBI moots swing pricing

But the Securities Appellate Tribunal (SAT) stayed the SEBI penalty after Franklin Templeton challenged the market regulator’s order. SAT also found the SEBI penalty ‘excessive’ and directed FTMF to deposit ₹250 crore in an escrow account till the case is disposed of. SEBI had challenged this in the top court.

SEBI argued that reducing the penalty amount will set a precedent because its decision to ask the company to return ₹512 crore was based on facts and statistics.

However, the Bench of Justices Abdul Nazeer and Krishna Murari said that the court will not interfere with the SAT order. “Four weeks further time is given to SEBI before SAT, Mumbai. We direct SAT to dispose of the matter expeditiously as possible,” the Supreme Court said.

FTMF submitted that it would not launch any new debt schemes till the matter is disposed of by SAT.

Franklin Templeton: Suspended debt schemes to pay Rs 3,303 crore

‘A drop in the ocean’

“The SC feels that ₹250 crore is enough. But the real question is how will this help the investors. The amount is just a drop in the ocean against what FTMF owes its investors. Also, ₹250 crore is peanuts versus the adjustments that FTMF has done in its books,” said Anil Jain, a chartered accountant and investor litigating the case in the Supreme Court.

Jain says that ₹512 crore that SEBI had asked FTMF to deposit was based on the NAV adjustments done by the fund house and it was the clawback amount that would have come to the unitholders. “There is a huge difference in the NAV of the six debt schemes that FTMF had given in April 2020, when the schemes were shut, versus the NAV they gave out recently. Of the ₹512 crore, ₹452 crore was clawback amount and ₹60 crore the interest on it. After a scheme is shut, rules do not provide for daily NAV adjustments. Investors say FTMF on its own resorted to declaring NAV adjustments even after the schemes were shut and brought down the valuation and thereby influenced the clawback amount,” Jain says.

Franklin Templeton declined to comment on the Supreme Court order.

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PSBs vacating branches open doors for other lenders

Banking & Finance

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The move by five public sector banks to reduce their branch numbers is proving godsend for lenders looking to expand their network.

The branches being vacated by Bank of Baroda (BoB), Punjab National Bank (PNB), Canara Bank, Union Bank of India (UBI) and Indian Bank have opened the doors to ready-made premises for other lenders. For the latter set, network expansion happens faster, at reasonable costs (as owners of these premises are desperate to rent them out) and without the hassle of re-doing interiors.

To cut down on operating expenses, the five PSBs have been merging or rationalising branches after the amalgamation of banks with them.

AS Rajeev, MD & CEO, Bank of Maharashtra, observed, 25-30 per cent of the branches opened by BoM last year were in the premises vacated by the PSBs. “The rent is comparatively less. That is why our rent outgo is not increasing despite the rise in the number of branches,” he said. BoM, which opened 82 branches last year, plans to open about 100 in FY22.

BK Divakara, CFO, CSB Bank, noted that 30-40 branches opened in 2020 and so far this year have been at premises vacated by a PSB. Divakara said the bank opened 101 branches last year and plans to open 200 this year.

CSB Bank actively scouts for ready-to-move premises being vacated by PSBs to avoid overlap of branches. These premises usually come with a strong-room (constructed to central bank specifications), counters and furnishings.

Branch rationalisation

After the amalgamation of Dena Bank and Vijaya Bank with BoB on April 1, 2019, the latter merged or rationalised 1,310 branches.

PNB rationalised about 430 branches after Oriental Bank of Commerce and United Bank of India were merged with it from April 1, 2020.

Canara Bank merged or closed 105 branches after taking over Syndicate Bank on April 1, 2020.

Union Bank of India merged or closed 275 branches after the amalgamation of Andhra Bank and Corporation Bank with it from April 1, 2020.

Indian Bank rationalised 203 branches after absorbing Allahabad Bank from April 1, 2020.

 

 

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PSBs vacating branches open doors for other lenders

Banking & Finance

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The move by five public sector banks to reduce their branch numbers is proving godsend for lenders looking to expand their network.

The branches being vacated by Bank of Baroda (BoB), Punjab National Bank (PNB), Canara Bank, Union Bank of India (UBI) and Indian Bank have opened the doors to ready-made premises for other lenders. For the latter set, network expansion happens faster, at reasonable costs (as owners of these premises are desperate to rent them out) and without the hassle of re-doing interiors.

To cut down on operating expenses, the five PSBs have been merging or rationalising branches after the amalgamation of banks with them.

AS Rajeev, MD & CEO, Bank of Maharashtra, observed, 25-30 per cent of the branches opened by BoM last year were in the premises vacated by the PSBs. “The rent is comparatively less. That is why our rent outgo is not increasing despite the rise in the number of branches,” he said. BoM, which opened 82 branches last year, plans to open about 100 in FY22.

BK Divakara, CFO, CSB Bank, noted that 30-40 branches opened in 2020 and so far this year have been at premises vacated by a PSB. Divakara said the bank opened 101 branches last year and plans to open 200 this year.

CSB Bank actively scouts for ready-to-move premises being vacated by PSBs to avoid overlap of branches. These premises usually come with a strong-room (constructed to central bank specifications), counters and furnishings.

Branch rationalisation

After the amalgamation of Dena Bank and Vijaya Bank with BoB on April 1, 2019, the latter merged or rationalised 1,310 branches.

PNB rationalised about 430 branches after Oriental Bank of Commerce and United Bank of India were merged with it from April 1, 2020.

Canara Bank merged or closed 105 branches after taking over Syndicate Bank on April 1, 2020.

Union Bank of India merged or closed 275 branches after the amalgamation of Andhra Bank and Corporation Bank with it from April 1, 2020.

Indian Bank rationalised 203 branches after absorbing Allahabad Bank from April 1, 2020.

 

 

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UK Court declares Vijay Mallya bankrupt, BFSI News, ET BFSI

Banking & Finance

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MCX data breach: No charges against former MD

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Mrugank Paranjape, the former MD and CEO of Multi Commodity Exchange (MCX), will not face any further charges for the alleged data breach scandal that rocked the exchange during his tenure in 2016. The MCX board, which met last Saturday, has decided to hold back Paranjape’s variable pay for the year.. There will be no further inquiry or charges levelled against Paranjape or anybody else into the matter, sources told BusinessLine.

The alleged theft of market data at MCX and its use by unauthorised persons was the second major incident of breach at any exchange in India after the National Stock Exchange (NSE) algo trading scandal came to light.

Also read: MCX holds back former MD’s salary in data breach case

In both the cases, the involvement of key people and a Mumbai-based research institution Indira Gandhi Institute of Development Research (IGIDR) had come to light. A forensic audit report by New Delhi-based firm TR Chaddha and Co had mentioned in its report that data shared by the MCX with Susan Thomas, a professor with IGIDR, could have gone into algorithmic trading and even accessed by unauthorised persons.

Professor Thomas is the wife of Ajay Shah, one of the accused in the NSE Co-location scam. However, MCX board is of the view that it could not find enough evidence to take the matter forward, the sources said.

‘Censure order’

“It is likely that MCX could pass a censure order in the data breach matter,” the source said. Censure is a formal and public act intended to convey that the persons concerned have been guilty of some blameworthy act or omission.

Also read: MCX probing ‘abuse’of pact with IGIDR

BusinessLine first broke the story in 2018 about the forensic audit that revealed how the MCX shared data via ‘private undertaking’ with Thomas and Chirag Anand, a Delhi-based algo software designer. The case was in a limbo since the forensic audit was submitted. The exchange had also sought explanation from some of the other employees in the exchange.

MCX has also conducted an internal inquiry regarding the purchase of land by it at the Gujarat International Finance-Tech (GIFT) City in Gandhinagar when Paranjape was at the helm. Sources told BusinessLine that more land was purchased than was formally approved by MCX board or its committee.

Another incident where the role of Paranjape and a senior board member was under the scanner was the award of a multi-crore software development contract to a London-based firm for a spot exchange platform. “In all these matters, MCX has decided not to hold anybody responsible for the lack of evidence,” the sources said.

When contacted, Paranjape said, “I have not received any communication from MCX and hence I’m not aware of anything. I’m not saying anything more.” MCX did not respond to an email query from BusinessLine

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Axis Bank Q1 net profit soars 94% to Rs 2,160 cr

Banking & Finance

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Private sector lender Axis Bank’s standalone net profit shot up by 94.2 per cent to Rs 2,160.15 crore in the first quarter of the fiscal from Rs 1,112.17 crore a year ago.

Net interest income grew 11 per cent to Rs 7,760 crore in the quarter ended June 30, 2021 as against Rs 6,985 crore a year ago.

The net interest margin was at 3.46 per cent at June-end 2021, registering a six basis points growth year-on-year.

Other income surged 39 per cent to Rs 3,588 crore in the first quarter of the fiscal from Rs 2,587 crore in the corresponding period last fiscal.

Provisions declined by 20 per cent to Rs 3,532.01 crore for the April to June 2021 quarter, as compared to Rs 4,416.42 crore a year ago.

“The bank has not utilised Covid provisions during the quarter,” Axis Bank said in a statement on Monday.

Asset quality improved. Gross non-performing assets amounted to Rs 25,949.77 crore or 3.85 per cent of gross advances, as against 4.72 per cent a year ago. However, on a sequential basis, it was higher compared to 3.7 per cent as on March 31, 2021.

Net NPAs were at 1.2 per cent as on June 30, 2021 as against 1.05 per cent as on March 31, 2021 and 1.23 per cent as on June 30, 2020.

The standard restructured loans under the resolution framework for Covid-19 related stress as on June 30, 2021 stood at Rs 2,192 crore that translates to 0.33 per cent of the gross customer assets.

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2 Banking Stocks To Buy With An Upside Target of 28%

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Investment

oi-Sunil Fernandes

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Broking firm, Emkay Global is bullish on the stocks of Federal Bank and ICICI Bank, with a buy on the stock with an upside target of up to 28%. The price targets on the stocks can be achieved within the next 1-year, says the brokerage firm.

Buy Federal Bank with a price target of Rs 110

According to Emkay Global, covid stress for Federal Bank manifests in higher NPAs/restructuring in retail/SME. Overall gross non performing assets ratio rose by 10 basis points, qoq to 3.5% due to elevated slippages (Rs 6.9bn), mainly in Housing/LAP.

Fresh restructuring was higher at Rs 8.5 billion and thus the cumulative restructured pool shot up to to Rs 24bn/1.9% of loans, led by Retail (59%), SME (25%) and Gold (8%), the brokerage firm has said. According to it, the restructuring pipeline stands at Rs4bn/0.3% of loans.

“The bank has assured that it has not done restructuring to suppress NPAs and thus should see a lower relapse rate. Collection efficiency stood at 95% in Jun’21, up from 90% in Apr’21, and it should improve further in Jul’21. We are trimming FY22-24E earnings by 1-4% but expect the bank’s RoA/RoE to improve gradually to 0.9-1.1%/11-13% over FY22-24E from 0.8%/10% in FY20. Maintain Buy with a revised price target of of Rs 110 (Rs 100 earlier), rolling forward to 1x Sep’23E ABV,” Emkay Global has said.

Buy ICICI Bank with a upside target of 22%

Another banking stock that Emkay Global has set a higher price target is the stock of ICICI Bank. The firm has set a price target of Rs 825 on the stock, as against the current market price of Rs 683.

“Overall credit growth has been far better (+17% yoy) than the system as well as close peers (HDFC Bank at 14% yoy) on continued strong traction in Retail loans (up 20% yoy) and Business Banking/SME loans. Retail growth has been mainly driven by relatively resilient mortgages, and should see acceleration in the auto, cards and PL businesses as the economy opens up. The bank has gained market share in cards – 18% vs. 13% in spends and 17.4% vs. 15.8% in CIF. It now has a full digi-stack (Retail/SME/Corporate) after the launch of the corporate stack. This should help the bank capture the respective ecosystems and derive better revenue share, in our view,” the brokerage has said.

2 Banking Stocks To Buy With An Upside Target of 28%

“ICICI Bank remains our top pick in the sector. Retain Buy with a revised target price of Rs 825 (2.5x Sep’23E ABV + subs value of Rs170), given its solid growth trajectory, superior core profitability, healthy capital/provision buffers, and management credibility/stability,” the brokerage has said.

Disclaimer

The above 2 stock are taken from the brokerage report of Emkay Global Financial Services. Investing in stocks is risky and investors need to be cautious. Neither Greynium Information Technologies Pvt Ltd nor the author nor the brokerage firm, would be responsible for any losses incurred based on decisions made from the article. Investors are also advised caution as the markets are now at a record high. Please consult a professional advisor and avoid investing lumpsum amounts.

Story first published: Monday, July 26, 2021, 19:14 [IST]



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Kotak Mahindra Bank Q1 net profit up 32%

Banking & Finance

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Kotak Mahindra Bank reported a 31.9 per cent jump in standalone net profit for the quarter ended June 30 at ₹1,641.92 crore compared to ₹1,244.45 crore in the same period last fiscal.

Total income grew 4.9 per cent to ₹8,062.81 crore (₹7,685.4 crore).

Net interest income increased 5.8 per cent to ₹3,942 crore (₹3,724 crore).

Net interest margin for the first quarter was at 4.6 per cent versus 4.4 per cent a year ago.

Other income more than doubled to ₹1,583.03 crore (₹773.54 crore). Of this, fee income surged 50.6 per cent to ₹1,169 crore on an annual basis.

Provisions declined marginally to ₹934.77 crore in the first quarter from ₹962.01 crore a year ago.

“Covid related provisions as of June 30 were maintained at ₹1,279 crore,” the bank said in a statement on Monday.

Total restructuring

In accordance with the Resolution Framework for Covid-19 and MSME announced by RBI, the bank implemented total restructuring of ₹552 crore as of June 30against ₹435 crore as on March 31, .

Covid related restructuring in the first round was about ₹226 crore while it was very less in the second round.

The lender faced headwinds in terms of asset quality deterioration amidst the second wave of the pandemic. Gross non-performing assets rose to ₹7,931.77 crore or 3.56 per cent of gross advances as on June 30, 2021 compared to 2.7 per cent a year ago.

Dipak Gupta, Joint Managing Director, Kotak Mahindra Bank, said there were challenges in terms of the ability of customers to pay as well as customers who could not be reached in time and moved into NPAs.

“Collections have normalised in June and July. We expect a reasonable number of customers, who couldn’t be reached for collections, to start payments,” he said.

Net NPAs were also elevated at 1.28 per cent of net advances as against 0.87 per cent as on June 30, 2020.

Capital adequacy ratio of the bank as per Basel III norms as of June 30, was 23.1 per cent and Tier-I ratio was 22.2 per cent.

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