Tag: banking news

Federal Bank Q2 consolidated net profit jumps 55 pc to Rs 488 cr, BFSI News, ET BFSI

Banking & Finance

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New Delhi, Private sector lender Federal Bank on Friday reported nearly 55 per cent jump in its consolidated net profit at Rs 488 crore for the second quarter of this fiscal ended September 30. The bank had posted a net profit of Rs 315.70 crore in the year-ago period.

Total income (consolidated) during the July-September period of 2021-22, however, was down at Rs 4,013.46 crore, as against Rs 4,071.35 crore in the same period of 2020-21, Federal Bank said in a regulatory filing.

The bank’s asset quality showed an impairment with the gross non-performing assets (NPAs or bad loans) rising to 3.22 per cent of the gross advances as of September 30, 2021 from 2.80 per cent in the year-ago period.

Likewise, the net NPAs were also higher at 1.15 per cent as against 0.99 per cent.

In absolute value, the gross NPAs stood at Rs 4,558.19 crore by the end of September 2021 quarter, up from Rs 3,591.72 crore in the corresponding period a year ago.

Value of net NPAs were at Rs 1,595.78 crore, up from Rs 1,249.85 crore.

Provisions for bad loans and contingencies for the reported quarter came down to Rs 264.53 crore, from Rs 565.46 crore in the year-ago quarter.

Shares of Federal Bank were trading at Rs 100.80 apiece on BSE, up 4.40 per cent from the previous close.



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Barclays Q3 beats expectations on strong investment bank performance, BFSI News, ET BFSI

Banking & Finance

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LONDON, – Barclays reported better than expected third quarter earnings on Thursday, as it followed Wall Street rivals in reaping bumper investment banking fees from a surge in trading and advisory mandates.

The British bank reported profit before tax of 2 billion pounds ($2.76 billion) for the July-September period, better than the 1.6 billion pounds average of analysts’ forecasts and double the 1.1 billion pounds it made in the same period a year ago. ($1 = 0.7242 pounds)

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Bank credit grows 6.48%; deposit by 10.16%, BFSI News, ET BFSI

Banking & Finance

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Mumbai, Bank credit grew by 6.48 per cent to Rs 110.13 lakh crore and deposit by 10.16 per cent to Rs 157.56 lakh crore in the fortnight ended October 8, RBI data showed. In the year-ago fortnight ended October 9, bank advances were at Rs 103.43 lakh crore, and deposits were at Rs 143.02 lakh crore, according to RBI’s Scheduled Banks’ Statement of Position in India as on October 8, 2021 data, released on Thursday.

In the previous fortnight ended September 24, 2021, bank credit had grown by 6.67 per cent and deposit by 9.34 per cent.

In FY2020-21, bank credit had grown by 5.56 per cent and deposit by 11.4 per cent.

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RBI may be looking at changing its reserve management strategy, BFSI News, ET BFSI

Banking & Finance

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RBI may be internally exploring shedding its traditional approach to foreign exchange reserve management amidst falling global yields adding to the fiscal costs of managing the reserves. A research paper by RBI economists suggests that the central bank should be more active in its forex assets management including looking beyond SDR currencies and active management of its gold reserves.

Global interest rates which have been on declining over the last four decades in advanced economies, touched their historic lows in 2020. “This low yield environment has made it an arduous task for the reserve managers to generate reasonable returns on their foreign assets” said a paper by Ashish Saurabh and Nitin Madan of RBI’s department of External Investments and Operations.

” Reserve managers can deal with the low yield environment by increasing the duration of their portfolios, investing in new asset classes, new markets and more active management of their gold stocks” they said adding that the choice of strategy, however, would require to be tailored to suit the risk appetite, investment priorities, skill sets and operational capabilities of individual institutions.

In its latest annual report, the central bank said that its agenda for 2021-22 was to “Continue to explore new asset classes, new jurisdictions/ markets for deployment of foreign currency assets (FCA) for portfolio diversification and in the process tap advice from external experts, if required”

RBI is fast accumulating dollars during the pandemic which is $639 billion dollars as of October 08 and more than $100 billion piled up since the pandemic, which adds to the challenge of foreign exchange reserves management.

Low returns on reserve deployment impacts RBI’s income . The surplus or profits that RBI makes in year is transferred to the government, which in to helps it to manage fiscal deficit. But at the same time the foreign investor from whom RBI buys the dollar ends up earning much more from the local investments. Also, a pile of reserves adds to the liquidity management challenge for the central bank. Income from foreign sources dipped 47 per cent in FY’20-21 to Rs 25, 469 crore, despite a strong pile-up in reserves. The central bank managed higher surplus transfer to the government on account of lower provisioning during the year, though it was a truncated accounting year for the central bank.

According to a survey by central banking portal ” Centralbanking.com”, reserve managers have found the reduction in yields since March 2020 as the most challenging aspect of their work. Most of the participants in this survey conducted in February-March’21 accepted that the low yield environment, notably in major reserve currencies, has changed the reserve management policies and practices in favour of investments in new markets, investments in new asset classes, investment in more currencies and changes in minimum credit rating accepted.



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Bank of Maharashtra net profit jumps 103 % to Rs 264 cr in Sept quarter, BFSI News, ET BFSI

Banking & Finance

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(Eds: Adding details) Mumbai, State-owned Bank of Maharashtra on Thursday reported a 103 per cent jump in its standalone net profit to Rs 264 crore in the September 2021 quarter, helped by healthy growth in net interest income.

The lender had reported a standalone profit after tax of Rs 130 crore in the same quarter of the previous fiscal.

The bank’s performance in the July-September 2021 period was good despite the pandemic, the bank’s Managing Director and CEO A S Rajeev said.

“One major reason for higher profit is growth of 34 per cent in NII (net interest income). Our core performance has improved,” he told reporters.

The bank’s recovery from written-off accounts stood at Rs 340 crore, including Rs 258 from the DHFL resolution, in the quarter, and this also resulted in higher profit.

During the April-September period of this fiscal, the bank reported a 104.11 per cent jump in the net profit at Rs 472 crore as against Rs 231 crore for HYFY21.

In Q2 FY2022, NII grew 33.84 per cent on a year-on-year basis to Rs 1,500 crore as against Rs 1,120 crore in the year-ago quarter.

Non-interest income rose 22.61 per cent to Rs 493 crore.

Net interest margin (NIM) improved to 3.27 per cent as on September 30, 2021.

Gross non-performing accounts (NPA) declined to 5.56 per cent from 8.81 per cent in the corresponding quarter of the previous fiscal. Net NPA also reduced to 1.73 per cent as against 3.30 per cent.

Provision coverage ratio improved to 92.38 per cent as against 87.15 per cent. It holds a cumulative COVID-19 provision of Rs 973 crore as of September-end.

Banks‘ recovery and up-gradation stood at Rs 645 crore from Rs 556 crore in the year-ago period.

Fresh slippages in the quarter were Rs 553 crore.

The lender said Srei Infrastructure, where it has an exposure of Rs 550 crore, was identified as an NPA in the quarter and the account is fully provided for.

Total basel-III capital adequacy ratio improved to 14.67 per cent with common equity tier-1 ratio of 11.38 per cent for Q2 FY22.

Gross advances increased 11.44 per cent to Rs 115,235 crore and total deposits were up by 14.47 per cent to Rs 181,572 crore.

Rajeev said the bank expects 14-15 per cent credit growth during the current fiscal.

The bank’s scrip was trading at Rs 21.90 apiece, up 4.53 per cent on the BSE. PTI HV HRS hrs



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HDFC Bank, Mastercard, 2 others launch $100-mln credit facility for MSMEs, BFSI News, ET BFSI

Banking & Finance

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HDFC Bank, Mastercard USAID, and DFC today announced a $100-million credit facility for micro, small and medium enterprises, which will help promote small businesses in India to digitise and recover from the economic impacts of the pandemic, Mastercard said in a statement.

“HDFC Bank is proud to join hands with Mastercard, USAID, and DFC in the endeavor to support small businesses in India”, said Rahul Shukla, Group Head, HDFC Bank.

HDFC Bank will reach beyond its current customer base to make at least 50% of this credit facility available to new small business borrowers and women entrepreneurs, while Mastercard will provide skills training and education on digitisation options, and DFC and USAID will facilitate the extension of the credit facility by de-risking HDFC Bank’s lending to small business owners.

Furthermore, the credit facility will be made available exclusively to new credit customers, with a goal of at least 50% being women entrepreneurs.

“At USAID, we believe gender equality and women’s empowerment are not just a part of development but are its core”, said Veena Reddy, mission director, USAID India.

The new credit facility aims to expand lending to small businesses that need financing to maintain and expand their operations, and enable recovery through digitisation. It also aims to support women-led businesses.



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Banks to be closed on Eid-Milad, Gajalaxmi Puja in Odisha, BFSI News, ET BFSI

Banking & Finance

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Bhubaneswar (Odisha) [India], October 19 (ANI): Odisha government on Monday announced that Banks and other banking institutions in the states would remain closed on Tuesday and Wednesday.

“Banks and other Banking institutions in Odisha will remain closed on October 19 (Tuesday) and October 20, 2021 (Wednesday) on the occasion of ‘Eid-Milad‘ and ‘Gajalaxmi Puja‘ respectively,” said Revenue & Disaster Management Department, Odisha government in a notification.

Eid-Milad or Eid Milad-un-Nabi is an annual celebration to commemorate the birth anniversary of Prophet Muhammad and is observed in the month of Rabi-ul-Awwal, the third month of the Islamic lunar calendar, which commences with the sighting of the moon. The occasion also marks the death anniversary of the Prophet. (ANI)

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Kerala Finance Minister holds talks with CSB MD ahead of employees strike, BFSI News, ET BFSI

Banking & Finance

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Thiruvananthapuram, Ahead of the three-day strike from October 20 called by the employees of the CSB bank, Kerala Finance Minister K N Balagopal on Monday held discussions with the bank’s Managing Director C V Rajendran. The CSB employees have planned to go on strike from October 20-22 and in support of this stir, all Bank employees in the state have planned a one-day strike on October 22.

The meeting was attended by Finance Secretary Rajesh Kumar Singh also.

The MD has agreed to hold a discussion with the United Forum of CSB bank unions today itself, the Finance Minister’s office said in a release.

The CSB employees are demanding wage revision and halting ‘anti-labour’ policy. PTI RRT BN BN

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Carry your cards, ATMs are not dying, BFSI News, ET BFSI

Banking & Finance

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There are various reports and discussions on how ATMs are going to vanish soon. But I don’t find any supportive data to believe in it. Digital payments are adding billions of transactions every month and POS terminals are also trying to add the features of ATMs but ATMs will stay in the system for a long time as cash still plays a dominant role in the economy. In fact, there are many restaurants and stores which do not accept any mode of digital payments and believe in only cash. Here is what RBI data of the last two years shows: ATMs are not dying.

State of ATMs – June 2020

Banks Total ATMs ATMs in Rural
PSU Banks 1,34,518 28,900
Pvt Banks 73,098 6,034
SFBs 1,935 199
White Label 23,790 11,807
Total ATMs 2,34,267 46,965

State of ATMs – June 2021

Banks Total ATMs ATMs in Rural
PSU Banks 1,36,889 26,858
Pvt Banks 73,750 6,281
SFBs 2,156 237
White Label 25,995 13,580
Total ATMs 2,39,761 47,011

The data shows that there is a slight increase in the total ATMs from 2020 to 2021. By June 2020 total ATMs were 2,34,267 which increased to 2,39,761 by June 2021. The slight decrease is in the number of rural ATMs by PSU banks may be due to bank mergers.

ATMs are a useful product

ATM was one of the biggest innovations in the banking industry much before digital payments. It killed the long serpentine queues at the bank branches where people used to spend hours to get cash. ATMs allow people to withdraw cash anywhere, anytime according to their convenience. RBI has also ensured that banks have enough ATMs and imposes penalty on banks which don’t maintain their ATMs.

Digital versus ATM

With the rise of digital payments, people have certainly shifted to mobile payments which are far more convenient. But that doesn’t mean that they are not using the cash. India’s cash to GDP ratio is 14.7%, which is much higher compared to the OECD countries.

For online shopping and small payments, people are using mobile payments, but for large payments, they still chose either cash or cheque.

The rise of POS

I often find that POS has been another product that is equivalent to ATMs. Over the years POS also added new features and it’s not just a payment receiving terminal. It has also started dispensing cash and that trend is rising. There are more than five million merchants using POS terminals and many of them are offering cash withdrawal. Recently a payment gateway company Mswipe told me that they are dispensing cash around Rs 50 lakh per day at POS terminals. POS will certainly help small-ticket transactions and areas where there are fewer ATMs.

Need for rationalising ATMs

India has on average 20 ATMs for 100,000 people, the global average is 50. I also find a big mismatch in the placement of ATMs in urban areas. There are areas where dozens of ATMs are set up within a vicinity of 2-3 miles, but there are areas where there are no ATMs at all. I think banks and financial institutions should review their placements. Also, ATM machines need to be upgraded with new features that will inform customers about the shortage of cash before using the machine.

Though people are using digital in villages as well, I am aware of people who travel for 10-12 miles to withdraw cash from ATMs. Jan Dhan Yojana has brought millions of people into banking but still there are many more millions away from banking. And they will need cash.



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FPIs pull out Rs 19,000 cr from banking, financial stocks in H1; stay cautious in H2, BFSI News, ET BFSI

Personal Finance

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Amid the euphoria in the stock markets, the Foreign portfolio investors (FPIs) have pulled out close to Rs 19,000 crore from the banking and financial sectors in the first six months of the current fiscal.

On the other hand, they have raised their exposure on stocks in the defensive sectors such as consumer goods, IT, pharma and telecom.

According to sector-wise FPI flow data compiled from depositories, FPIs pulled out Rs 18,700 crore from the financial services sector between April and September. Of the total outflows, Rs 13,872 crore went from the banking sector while Rs 4,827 crore was pulled out from ‘other financial services’, which covers financial institutions, non-banking finance companies (NBFCs) and housing finance companies (HFCs).

Nifty Bank lagging far behind vis-a-vis Nifty 50 return on a YTD basis, while the leaders are Nifty Metals, Nifty Realty and Nifty IT.

Banking sector

Within the banking sector, the equity segment witnessed an outflow of Rs 12,964 crore during the April-September period while Rs 1,014 crore went out of the debt segment during H1. On the other hand, the other financial services category witnessed an inflow of Rs 1,159 crore in equities and outflow of Rs 5,797 crore from debt in the first six months of the current fiscal.

“A stand out feature of FPI flows in recent weeks is the outflows from banking and inflows into IT. Even though IT is highly valued, this segment is attracting increasing flows since earnings visibility is high in the segment while banking is struggling with poor credit growth and rising asset quality concerns, V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.

Defensive sectors

FPIs have been investing in defensive sectors due to rising volatility with the ‘household & personal products’ sector witnessed the highest FPI inflows in the last six months at Rs 6,725 crore followed by consumer durables ( Rs 6,580 crore), retailing (Rs 6,340 crore), telecom (Rs 5,773 crore) and insurance ( Rs 2,881 crore).

Though the economy has recovered in the second half, the market participants are having a cautious outlook as there has been no big jump in loan growth and concerns on NPAs remain.

Going forward, volatility in the global markets as well as global slowdown may impact foreign flows moving into Indian shores.

Also, any direction by US Fed towards tapering of the stimulus measures would make FPI flows into emerging markets volatile and at the same time it would be crucial in dictating the direction of foreign flows into Indian equities.



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