New Delhi, Nov 7 (PTI) Eight of the top-10 most valued companies together added Rs 1,18,930.01 crore in market valuation last week, with Tata Consultancy Services and State Bank of India (SBI) emerging as the lead gainers. Last week, the BSE benchmark gained 760.69 points or 1.28 per cent.
A special one-hour Muhurat trading session was held on Diwali (November 4) to mark the beginning of the traditional Hindu calendar year, called ‘Vikram Samvat’.
Markets were closed on Friday on the occasion of ‘Diwali Balipratipada’.
The market valuation of Tata Consultancy Services zoomed Rs 40,782.04 crore to reach Rs 12,98,015.62 crore.
SBI added Rs 25,033.54 crore taking its valuation to Rs 4,73,406.02 crore.
The valuation of Infosys jumped Rs 17,158.49 crore to Rs 7,18,890.08 crore and that of HDFC gained Rs 10,153.08 crore to Rs 5,24,370.77 crore.
Bajaj Finance added Rs 7,502.68 crore taking its valuation to Rs 4,54,304.34 crore.
The market capitalisation (m-cap) of Hindustan Unilever Ltd jumped Rs 6,978.29 crore to Rs 5,69,458.69 crore and that of HDFC Bank rallied Rs 6,453.41 crore to Rs 8,82,981.83 crore.
Kotak Mahindra Bank‘s valuation went higher by Rs 4,868.48 crore to Rs 4,07,881.48 crore.
In contrast, the market capitalisation of Reliance Industries Ltd (RIL) declined Rs 24,612.17 crore to Rs 15,85,074.58 crore.
In the ranking of top-10 firms, RIL remained the most-valued company, followed by Tata Consultancy Services, HDFC Bank, Infosys, Hindustan Unilever Limited, ICICI Bank, HDFC, State Bank of India, Bajaj Finance and Kotak Mahindra Bank.
Bulk tea major McLeod Russel India on Friday said its bankers have signed an Inter Creditors Agreement (ICA), a precursor to a resolution plan for debt restructuring, that rekindled hope of revival of the once largest tea producer of the world. After the promoters of McLeod reach a settlement with a financial creditor, Techno Electric & Engineering, the company could be out of National Company Law Tribunal‘s insolvency process.
The trigger for the insolvency application by Techno was a loan agreement for providing Rs 100 crore inter-corporate deposit (ICD).
“We hope to reach a satisfactory resolution shortly with the bankers on debt recast,” a McLeod official told PTI.
“All the banking lenders have signed/executed an Inter Creditors Agreement (ICA) to provide for ground rules for finalisation and implementation of Resolution Plan in respect of borrower/Company”, McLeod Russel said in a stock exchange filing.
There are nearly 8-10 lenders including a combination of private and public-sector banks, such as Axis Bank, UCO Bank, Allahabad Bank, Indusind Bank and ICICI Bank.
The outstanding debt including interest will be around Rs 2100-2300 crore, company officials estimated which is not sustainable for the tea major.
Till March 2018, McLeod had 52 estates in the country producing 67 million kg of tea with a total saleable production of 89 million kg. By FY20, its total saleable quantity had dropped by nearly 53 per cent to 42 million kgs with the company selling estates to square off debts.
A slew of ICDs – unsecured borrowings from other entities – extended to some of the other BM Khaitan group companies, hurtled the tea major into a serious crisis. PTI BSM NN NN
Another option, if you are unable to make payments by the due date, is opting for a loan against your credit card. Various credit card companies offer pre-approved loans to customers, these can actually come in handy in this scenario. However, be mindful of the costs as the interest rate and other charges may be steeper. If you have multiple credit cards, compare interest rates and processing fees on each and go with the one that has least total cost for your preferred loan tenure.
Credit card spends jumped 60 per cent year-on-year (YoY) in September, helped by the onset of the festive season.
On a sequential basis, the growth slowed down to 3 per cent at Rs 80,500 crore, according to various research reports.
The festive season, opening up of the economy and rising consumer confidence is set to keep the credit card spends buoyant, experts say.
Kotak Mahindra Bank reported the highest growth (27% MoM) in September, followed by IndusInd Bank and ICICI Bank (13% each). Other major players reported growth in the +-4% range. On a two-year CAGR basis, spends for ICICI Bank grew 58%, IndusInd 33%, Kotak Mahindra Bank 29%. HDFC Bank and SBI Cards posted growth of 10–15% and Axis Bank and SCB 2–3%. While, Citi and Amex saw a decline of 8% and 26%, respectively. ICICI Bank surpassed SBI Cards to become the second-largest player in spends, with market share of 19.3% over 6MFY22.
Outstanding credit cards up 10.8%
The total number of outstanding credit cards in the system grew 10.8% YoY to 65 million in September 2021 – the highest in the past 11 months.
Among the major players, ICICI Bank reported strong growth of 26.1% YoY, followed by IndusInd Bank (15.6%), SBI Cards (14.3%). Foreign players such as American and Citi witnessed declines of 10% and 5% respectively. SBI Cards and ICICI Bank continued to perform strongly, resulting in a 59–218 bps YoY increase in market share to 19.3% and 18.0% respectively in September.
ICICI Bank added close to 2 million new cards in the past 10 months, taking its credit card base to 11.6 million as of September.
Despite a 247 bps year on year decline, HDFC Bank remained the largest player with a market share of 23.0%.
10.91 lakh card adds
Around 10.91 lakh new cards were added to the system in September with HDFC Bank being the largest acquirer at 2.44 lakh cards. ICICI Bank added 2.34 lakh, Axis Bank added 2.03 lakh, while SBI Cards added 1.75 lakh cards in September, while, Standard Chartered Bank, AMEX and Citi posted a decline of 13,000, 11,000 and 4,500, respectively, in the card base. IDFCF Bank also posted a strong performance with 39,000 new credit card additions in September.
Higher spends per card
Monthly spends per card for the industry increased to Rs 12400, from an average of Rs 10,700 over the past six months (higher v/s pre-Covid levels). This was attributable to an increase in the ticket size to Rs 4,300, the highest in the past several years.
Conversely, the number of transactions per card declined to 2.8 v/s 3.0 in August (3.1 in March). IndusInd and Kotak Mahindra Bank saw a higher increase of Rs 2,400 and Rs 2,200, respectively, followed by ICICI Bank with Rs 1,400.
IndusInd (Rs 9,700) and Amex (Rs 5,900) had the highest ticket sizes, followed by Kotak Mahindra Bank (Rs 5,100) and ICICI Bank (Rs4,900). All other players were in the range of Rs 3,900–Rs 4,300 – barring Citi and SCB, which were lower at Rs 3,000–3,200.
With the economy opening up, the asset quality of private banks improved in the September quarter. Further, banks efforts in reducing slippages, improved collections, better recoveries from written off accounts and RBI mandated loans recast also helped banks keep a lid on NPAs.
While the year on year NPA figures of most banks were higher than the last quarter’s figures, they are not comparable as after the Supreme Court‘s stay on classifying loans that were standard as on August 31 from NPAs banks had reported NPAs under proforma figures.
The drop
HDFC Bank, India’s largest private sector lender, reported a drop in gross non-performing assets (GNPAs) to Rs 16,346 crore during July-September against Rs 17,099 crore in the preceding quarter. Provisions and contingencies also dropped to Rs 3,924.70 crore during the quarter compared with Rs 4,830.84 crore in the June quarter. GNPA ratio fell to 1.35 per cent as of September from 1.47 per cent in the June quarter. It was 1.08 per cent in the same quarter, a year ago.
ICICI Bank‘s gross non-performing assets fell to 4.82 per cent of gross advances as on September 30, against 5.15 per cent in the June quarter. Net NPAs (bad loans) also fell to 0.99 per cent from 1.16 per cent sequentially in the September quarter.
Federal Bank‘s asset quality improved on a sequential basis as gross NPA came at 3.24% as against 3.50% in the previous quarter. Its net NPA stood at 1.12% from 1.23% quarter-on-quarter (QoQ). However, the gross NPA during the year-ago quarter stood at 2.84% whereas net NPA at 0.99%. Provisions (other than tax) and contingencies declined to Rs 245 crore as against Rs 543 crore in the previous quarter and Rs 532 crore in the year-ago quarter.
Axis Bank’s gross NPAs came in at 3.53% in the second quarter, lower than 3.85% in the June quarter and 4.18% in the previous year period. Meanwhile, the net NPA ratio during the quarter stood at l.08%.
Kotak Mahindra Bank’s gross NPAs during the second quarter stood at 3.19% compared with 3.56% in the June quarter. However, it was higher than 2.70% in the year-ago quarter. Meanwhile, the net NPA improved to 1.06% versus 1.28% on a sequential basis, and remained flat on a year-on-year basis.
GNPAs of banks will rise to 8-9 per cent this fiscal, well below the peak of 11.2 per cent seen at the end of fiscal 2018, with the COVID-19 relief measures such as restructuring dispensation, and the Emergency Credit Line Guarantee Scheme (ECLGS) helping limit the rise, according to CRISIL Ratings.
GNPAs as at March-end 2021 had declined to 7.5 per cent against 8.2 per cent as at March-end 2020.
With about 2 per cent of bank credit expected under restructuring by the end of this fiscal, stressed assets ― comprising gross NPAs and loan book under restructuring ― should touch 10-11 per cent (against March-end 2021 estimate of about 9 per cent), the credit rating agency said.
A month after the RBI’s fresh rules on mandates for recurring card payments kicked in, banks accounting for over 95% of credit cards in the market are compliant with the new system. Over 20 lakh e-mandates have been registered by cardholders with a host of merchants.
According to payment industry sources, the banks whose credit cards are eligible for new standing payment mandate include SBI, Axis Bank, HDFC Bank, Yes Bank, American Express, Bank of India, Bank of Baroda, ICICI Bank, HSBC, RBL Bank, IndusInd Bank and Kotak Mahindra Bank. Several banks have enabled the mandate for both debit cards as well as credit cards.
Automatic recurring payments also require the merchant to be on-boarded to the new e-mandate framework. The compliant businesses include most of the OTT (over-the-top) streaming platforms, private life & general insurance companies, global IT giants like Google, Facebook, Microsoft and McAfee, as well as some edtech companies.
Interestingly, Indian cardholders who have registered with overseas service providers, having payment gateways abroad, are not subject to the new rules. This is because the RBI has no jurisdiction to impose second-factor authentication in those markets. It is up to the customer to disable international transactions on their cards.
What has facilitated the fast on-boarding of merchants is IT solutions like SI Hub developed by BillDesk and Mandate HQ developed by Razorpay. However, some domestic banks like Canara Bank & Punjab National Bank and Standard Chartered Bank were until last week in the process of making the necessary system changes.
According to the sources, card-based recurring transactions are 2.5% in terms of the number of transactions and 1.5% in terms of the value of the total card payments done in the country. On average, approximately 75% of domestic recurring transactions are of values of up to Rs 5,000. The corresponding figure for cross-border recurring transactions is approximately 85%.
The net profit of private banks rose 26 per cent year on year in the July-September 2021 quarter and 21.9 per cent sequentially over March-June 2021 (Q1), as the pandemic ebbed and economic recovery has taken hold.
The 12 private lenders posted a collective net profit of Rs 21,965 crore during the second quarter.
Provisions and contingencies of the lenders that have declared results fell both 22 per cent year on year and 30.2 per cent quarter on quarter to Rs 12,805 crore. The provisions include those for one time restructuring of loans announced by the RBI in May.
Net interest income was up 10.8 per cent y-o-y and 2.5 per cent sequentially. Other income rose 15.7 per cent to Rs 22,638 crore.
Gross non-performing assets grew 1.1% to Rs 1.73 lakh crore y-o-y, but fell 3.5 per cent sequentially from about Rs 1.8 lakh crore in the June quarter.
Net NPAs rose by 27.5 per cent y-o-y to Rs 42,895 crore, but fell sequentially by 7.3 per cent from Rs 46,280 crore in June 2021.
ICICI Bank posted a higher-than-expected 29.6% on-year rise in net profit to Rs 5510 crore in July-September, which was highest in the bank’s history. As the bank maintained 17% growth in advances, and further improved on net interest income and margins, asset quality ratios provided additional support to the bottomline by keeping provision costs low.
Axis Bank reported an over 86% year-on-year rise in net profit to Rs 3130 crore for the September quarter, benefiting from an improvement in asset quality, which led to a fall in provisioning. The bank expects consumer and business confidence to continue to trend upward in Oct-Mar on the back of a rise in vaccination coverage and as the economy opens up, pent-up demand and spends materialise.
Federal Bank posted a higher than expected net profit of Rs 460 crore in the September quarter, led by a fall in overall provisions as the lender reported improvements in asset quality. The bank’s net profit rose 49.6 per cent on year, and 25.3 per cent on quarter. This was supported by a faster-than-industry credit growth that fuelled a rise in core ratios such as net interest income and net interest margins.
Yes Bank’s net profit jumped 74 per cent year-on-year in the September quarter to Rs 230 crore on the back of a sharp fall in provisioning. Going ahead, a sharp reduction in overdue loans and sustained momentum in loan recoveries and upgrades augurs well for the overall asset quality of the bank.
RBL Bank posted a 78.6 per cent on-year fall in net profit for the September quarter at Rs 30 crore due to higher provisions amid an increase in bad loans. For April-June, the private sector lender had reported a net loss of Rs 460 crore. Slippages, gross non-performing assets ratios, and provisions had peaked in the reporting quarter, and the lender was on track to see growth, the bank said.
Banks and card networks have received nearly two million auto-debit mandates after the Reserve Bank of India (RBI) made it mandatory from October 1 to take prior consent of a customer before debiting their accounts.
Most of the recurring payments are linked to credit cards, while such a facility is not available in most places for debit cards.
In August, total credit card transactions stood at 19 million, and debit card transactions at 358.5 million. In value terms, credit cards were at Rs 77,732.94 crore and debit cards at Rs 64,351.52 crore.
The readiness
State Bank of India, Axis Bank, HDFC Bank, Yes Bank, American Express, Bank of India, Bank of Baroda, ICICI Bank, HSBC, RBL Bank, IndusInd Bank and Kotak Mahindra Bank have implemented the recurring payment framework for their customers.
Service providers such as Razorpay, Billdesk, PayU have come up with solutions to help card issuers, customers, and merchants to register their mandates on their customised platforms. BillDesk has set up SI Hub, PayU has created Zion while Razorpay has set up MandateHQ.
RBI’s auto-debit rule
Under the new auto-debit rules that kicked in on October 1, there are no automatic recurring payments for services like recharge, utility bill as the additional factor of authentication (AFA) has now become mandatory.
To ensure safety and security of card transactions, the central bank had, in December last year, directed all banks that processing of recurring transactions (domestic or cross-border) using cards or Prepaid Payment Instruments (PPIs) or Unified Payments Interface (UPI) under arrangements/practices not compliant with AFA would not be continued beyond March 31, 2021.
However, non-readiness of some of the players had forced the RBI to extend the deadline on recurring payment till September 30. The rule is applicable to all types of recurring payments like utility bills, phone recharge, DTH and OTT, among others.
As per the guidelines, banks will send a one-time password (OTP) to customers for payments above Rs 5,000.
Mumbai, Equity benchmark Sensex advanced over 100 points in early trade on Wednesday tracking gains in index heavyweights like Reliance Industries, ICICI Bank and Asian Paints. The 30-share index was trading 106.71 points or 0.17 per cent higher at 61,456.97 in initial deals. Similarly, the Nifty advanced 26.70 points or 0.15 per cent to 18,295.10.
Asian Paints was the top gainer in the Sensex pack, rallying around 6 per cent, followed by ICICI Bank, Sun Pharma, Nestle India, Dr Reddy’s and TCS.
In the previous session, the 30-share index ended 383.21 points or 0.63 per cent higher at 61,350.26, while Nifty surged 143 points or 0.79 per cent to 18,268.40.
Foreign institutional investors (FIIs) were net sellers in the capital market, as they offloaded shares worth Rs 2,368.66 crore on Tuesday, as per exchange data.
High input costs have adversely impacted margins and profitability of select consumer and manufacturing companies despite steady volume and sales growth, said Binod Modi Head-Strategy at Reliance Securities.
This essentially raises concerns about sustainability of earnings rebound in subsequent quarters, which has weighed on sentiments recently, he noted.
However, “despite that overall performance so far has been good with sharp growth in revenue aiding double digit growth in earnings,” he said, adding “in our view, the market may remain volatile with downward bias in the near term and investors will track the pricing power of industries”.
Elsewhere in Asia, bourses in Shanghai, Hong Kong, Tokyo and Seoul were trading with losses in mid-session deals.
Stock exchanges in the US ended on a positive note in the overnight session.
Meanwhile, international oil benchmark Brent crude fell 0.47 per cent to USD 85.25 per barrel.
The pandemic has hit individual borrowers more than industries and businesses, going by the recast of loans announced under the government’s one-time restructuring scheme.
The eight banks that have declared second-quarter results have announced reast of Rs 27,708 crore worth of loans under the One-Time Restructurig 2.0, of which 80% recasts are personal loans and the rest 20% availed for business and by MSMEs.
The highest loan recasts were at HDFC Bank at Rs 17,395 crore, followed by another private lender ICICI Bank at Rs 4,156 crore.
The recasts by MSMEs was smaller, possibly due to other forms of emergency credit available to them.
Of the total restructured loan book of Rs 2 lakh crore for the banks as on June 30, 2021, the restructuring under the first coronavirus wave is estimated at 51 per cent of the total restructuring of Rs 1 lakh crore, while restructuring under the second wave is estimated at 31 per cent of the total restructuring or Rs 0.6 lakh crore, it said.
Considering that 30-40 per cent of the loan book was under moratorium during Q1 FY2020 across most banks, the loan restructuring at two per cent of advances after the second wave is a positive surprise and much lower than its earlier estimates, rating agency Icra said.
Resolution Framework 2.0
In May this year, the Reserve Bank announced a slew of measures including loan restructuring for individual and small businesses hit hard second Covid wave.
This recast was for those who had not availed restructuring under any of the earlier frameworks, including the Resolution Framework 1.0 of RBI dated August 6, 2020, and who are classified as standard as on March 31, 2021, shall be eligible for the Resolution Framework 2.0.
Private sector lender ICICI Bank on Monday crossed the market capitalisation of Hindustan Unilever to become the fifth largest company by market value.
According to BSE data, ICICI Bank’s market capitalisation (m-cap) stood at ₹5.83 lakh crore, just above HUL’s ₹5.76 lakh crore. This follows the bank posting its highest ever quarterly net profit in the July to September 2021 quarter.
The bank’s scrip touched a 52-week high of ₹859.70 on the BSE on Monday before ending at ₹841.05, registering a gain of 10.8 per cent over the previous day’s close.
Second bank in top 5
ICICI Bank becomes the second lender after HDFC Bank to break into the top five companies on the BSE in terms of m-cap. The lender posted a near 30 per cent increase in its second quarter standalone net profit at ₹5,510.95 crore compared to ₹4,251.33 crore in the same period last fiscal. Net interest income rose 25 per cent y-o-y while net non-performing assets at 0.99 per cent was the lowest since December 2014.
Analysts said the bank has been performing well on all fronts. “The bank has been delivering strong retail growth (20 per cent year-on-year), while the SME/business banking growth is also robust now (albeit on a low base). Corporate growth should revive soon too,” said a report by Emkay Global Financial Services, adding that asset-quality outcomes amid the pandemic were better than expected.
