Tag: rise

Bank of Baroda reports 24% year-on-year rise in Q2 standalone net

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Bank of Baroda (BoB) reported a 24 per cent year-on-year (YoY) increase in second quarter standalone net profit to ₹2,088 crore from ₹1,679 crore in the year-ago quarter on robust growth in non-interest income.

Net interest income (difference between interest earned and interest expended) edged up 2 per cent YoY to ₹7,566 crore (₹7,410 crore in the year ago quarter).

Non-interest income, including commission-exchange-brokerage, forex income, trading gains, and recovery from technically written-off accounts rose 23 per cent YoY to ₹3,579 crore (₹2,910 crore).

NPAs improve

For the reporting quarter, the public sector bank made provisions of ₹2,600 crore towards non-performing assets (NPAs) and bad debts written-off, up 14 per cent YoY from ₹2,277 crore in the year ago period.

Fresh slippages were a tad higher at ₹5,223 crore (₹5,129 crore). Reduction in NPAs via recovery, upgrdation and write-offs was at ₹9,327 crore (₹9,836 crore).

Also see: Bank of Baroda signs MoU with NCDEX e-Markets

Gross NPA position improved to 8.11 per cent of gross advances as at September-end 2021 against 8.86 per cent in the preceding quarter. Net NPA position too improved to 2.83 per cent of net advances from 3.03 per cent.

Domestic gross advances grew 2.99 per cent YoY to ₹6,23,368 crore. This came mainly on the back of growth in retail (auto, personal, gold, education and home loans), agriculture and MSME advances. Overseas gross advances declined 2.68 per cent YoY to ₹1,10,665 crore.

Also see: Banks make higher-than-required provisions for Srei Group exposure

Domestic deposits increased by 3.43 per cent YoY to ₹8,64,603 crore. Overseas deposits declined 19.90 per cent YoY to ₹94,881 crore

BoB’s second quarter consolidated net profit increased by about 22 per cent YoY to ₹2,168 crore (₹1,771 crore).

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ICICI Prudential Life posts 47% rise in Q2 net profit

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ICICI Prudential Life Insurance reported a 46.6 per cent jump in its net profit for the second quarter of the fiscal, aided by robust growth in premium income.

For the quarter-ended September 30, 2021, the private sector life insurer posted a net profit of ₹444.57 crore as against a net profit of ₹303.22 crore in the same period last fiscal.

Net premium income increased by 8.33 per cent to ₹9,286.53 crore in the second quarter of the fiscal from ₹8,572.19 crore a year ago.

Net income from investments surged by 70.4 per cent on a year-on-year basis to ₹13,545.83 crore in the July-September 2021 quarter.

Claims and benefits

Claims and benefits paid in the second quarter of the fiscal amounted to ₹8,022 crore compared to ₹5,668 crore in the first quarter of the fiscal and ₹4,909 crore in the second quarter of 2020-21.

“Claims and benefit payouts increased by 82.4 per cent from ₹7,504 crore in the first half of 2020-21 to ₹13,690 crore in the first half this fiscal primarily on account of increase in surrender and withdrawals and death claims. The company had Covid-19 claims (net of reinsurance) of ₹862 crore,” ICICI Prudential Life Insurance said in a statement on Tuesday.

The insurer’s solvency ratio was 199.9 per cent as on September 30, 2021 versus 193.7 per cent as on June 30, 2021 and 205.5 per cent as on September 30, 2020.

Its 13th month persistency ratio was 81.3 per cent as on September 30, 2021 versus 80.5 per cent a year ago.

NS Kannan, Managing Director and CEO, ICICI Prudential Life Insurance said, “The improvement in the pandemic situation with each passing month, increased consumer awareness on the need for life insurance and our suite of customer-centric products have enabled us to grow new business by 62 per cent sequentially this quarter. Significantly, we posted our best ever September on monthly sales for any year since inception, aided by our well-diversified product and distribution channel mix.”

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HFCs may see robust growth but NPAs could rise: CARE Ratings

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The second wave of the Covid-19 pandemic is expected to lead to a rise in the non-performing assets of housing finance companies in the near term with the Gross Stage 3 ratio expected to increase by 30 basis points this fiscal.

According to a report by CARE Ratings, the Gross Stage 3 ratio for housing finance companies would be 3.1 per cent, which would be around 30 basis points higher that 2.8 per cent in 2020-21.

“The deterioration would be higher in the first half of 2021-22; however, we expect that collections and asset quality for housing finance companies would improve in the second half as the economy improves,” CARE Ratings said on Monday.

While a large portion of deterioration would come from developer loan book, it expects that retail prime loans would also witness stress as borrowers have also been impacted economically during the pandemic.

The agency had earlier estimated a 20 basis points increase in Gross Stage 3 assets to 2.9 per cent at the end of 2021-22 from an estimated 2.7 per cent last fiscal.

For the analysis, it has considered top six large housing finance companies it rates.

Robust business growth

However, business growth for housing finance companies has remained robust and early indications from this fiscal suggest there would be a growth of about 8 per cent to 12 per cent in their portfolios, it said.

It also noted that many large housing finance companies have raised equity capital during last fiscal and some are in the process of raising equity capital in this financial year. “This has improved the strength of their balance sheets and augmented their loss-absorption capacity,” it said.

CARE Ratings further said that according to its estimate, the total equity capital likely to be raised during the current fiscal along with actual equity raised last fiscal would be more than sufficient for the total increase in Gross Stage 3 assets during 2020-21 and 2021-22.

“While we expect that the impact of the pandemic on Gross Stage 3 assets would be higher than what was earlier estimated, stronger balance sheets of large housing finance companies and higher equity capital buffers provide good comfort,” it said, adding that improvement in fund-raising abilities of these firms by tapping retail deposits augurs well for their longer-term credit outlook.

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SFBs rise as RBI clears holding firm merger

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Shares of Equitas Small Finance Bank, Equitas Holdings, Ujjivan Small Finance Bank and Ujjivan Financial Services surged sharply on Monday after the Reserve Bank of India (RBI) allowed small finance banks (SFBs) and their holding companies to apply for the amalgamation scheme.

Shares of Equitas Holdings and Ujjivan Financial Services jumped the maximum 20 per cent on Monday while those of the other SFBs also rose but could not sustain the early gains. Shares of Ujjivan SFB closed at ₹30.95, recording a gain of 1.48 per cent over the previous day’s close after rising 10.8 per cent to ₹33.80 intra-day. Similarly, Equitas SFB, which jumped to a high of ₹76.75 in intra-day trade, closed at ₹69.50, up 6.76 per cent.

According to analysts, the RBI’s move allowing Equitas Small Finance Bank and Ujjivan Small Finance Bank to apply for merger of their holding companies with themselves is positive for the holding companies.

Discount to narrow

The amalgamation scheme will unlock significant value for shareholders of the holding companies as the hold company discount narrows. However, the fair value for investors would depend on the swap ratio, which will be the key to monitor, said Motilal Oswal Financial Services.

On Saturday, Equitas Small Finance Bank said it would seek the RBI’s approval for amalgamation with Equitas Holdings, while Ujjivan Small Finance Bank said it would initiate steps for the amalgamation of the holding company, Ujjivan Financial Services, with itself.

According to the RBI norms, small finance banks need to dilute promoter-holding to 40 per cent within five years of commencement of business.

“Equitas Holdings currently holds 82 per cent in Equitas SFB and the initial promoter lock-in of five years expires on September 4, 2021. Ujjivan Financial Services holds 83.3 per cent in Ujjivan SFB and the initial promoter lock-in expires on January 31, 2022,” said JM Financial.

Reverse merger

According to the Scheme of Amalgamation, Equitas Holdings and Ujjivan Financial Services are expected to reverse-merge with Equitas SFB and Ujjivan SFB, respectively, and current shareholders of the holding companies will receive the shares of their respective small finance banks, thus effectively leading to the exit of the promoter of the bank, it added

Currently, Equitas Holdings and Ujjivan Financial Services are trading at a discount of 35 per cent and 43 per cent to their fair value, respectively. For Equitas Holdings, the trading discount since listing has been in the range of 24-54 per cent, while for Ujjivan Financial Services, the holding discount has been around 33-57 per cent, said Motilal Oswal.

JM Financial said it believes this to be a positive development for the small finance banks as well as their holding companies.

At the current market price, zero holding company discount implies an upside of 55 per cent and 77 per cent. respectively, for Equitas Holdings and Ujjivan Financial Services. “We maintain ‘Buy’ rating on Equitas SFB and Ujjivan SFB with a target price of ₹75 and ₹48, respectively,” it said.

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With rise in hospital bills, demand for high-value cover goes up

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Worries over high medical costs for Covid-19 treatment are pushing a number of people to look at high-value health insurance covers of as much as ₹1 crore.

Insurers say that while the overall average sum insured for health insurance has increased to at least ₹5 lakh, many are even taking up policies of ₹1 crore.

“Of late, there is demand for ₹1 crore sum-insured health insurance covers. Earlier, there was not so much of demand. With the kind of expenditure incurred in Covid-19 treatment, many people are looking at such policies. Also, there isn’t a huge increase in premium if a person moves from a ₹20 lakh policy to ₹1 crore cover,” said Rakesh Goyal, Director at Probus Insurance. There are also additional features in such high net policies with global insurance cover. This is not a mass market product, he further said.

Also read: Insurers settle Covid claims worth over ₹15,000 cr

Vivek Gambhir, Senior Vice-President and Product Head – Accident and Health at Tata AIG General Insurance also said there is a move towards higher sum-insured with the average size being between ₹5 lakh and ₹10 lakh.

“Some companies are also offering ₹1 crore policies,” he said.

Higher medical inflation

Gambhir, however, attributed this high sum insured to not only Covid -19 but also to increased medical inflation over the last four to five years. “Covid has had an impact but in the last four to five years, the average room rent has increased significantly. So, average claim size also increases,” Gambhir added.

While many first-time customers are purchasing health covers of ₹1 crore, others with existing policies are also going for a top-up cover.

“In severe Covid cases, often long duration on a ventilator or even ECMO is needed. A high value policy can take care of such expenditure,” noted an executive with another insurance company, pointing out that many insurers were offering such covers even in the past.

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DCB Bank Q4 net profit rises 13%

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DCB Bank has reported a 13 per cent jump in its net profit for the quarter ended March 31, 2021 at ₹78 crore compared with ₹69 crore in the same period the previous fiscal.

For 2020-21, its net profit fell marginally to ₹336 crore compared with ₹338 crore in 2019-20.

The bank’s net interest income fell four per cent to ₹311 crore in the January to March 2021 quarter versus ₹324 crore a year ago.

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Federal Bank reports 12 per cent increase in total deposits

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Private sector lender Federal Bank reported a 12 per cent increase in total deposits and a 6 per cent rise in gross advances for the third quarter of the fiscal.

In provisional numbers released for the quarter ended December 31, 2020, Federal Bank reported total deposits of ₹1,61,670 crore as against ₹1,44,592 crore a year ago.

Financial discipline has been visible even in the relatively stressed segments, says Federal Bank chief

Gross advances rose to ₹1,28,174 crore at the end of the third quarter this fiscal as against ₹1,20,861 crore a year ago.

CASA ratio stood at 34.48 per cent at the end of December 31, 2020, from 33.38 per cent as on September 30, 2020, and 31.46 per cent as on December 31, 2019.

The next googly is difficult to predict: Federal Bank chief

Liquidity coverage ratio was at 248.26 per cent at the end of the third quarter this fiscal from 266.27 per cent in the previous quarter and 181.3 per cent a year ago.

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