Monday, December 1, 2008

Indian Financial Sector Who's Got The Exposure?

Sector loan growth has accelerated to 27.6% YoY as of 7 November, despite slowing economic growth. Though partly driven by higher oil company borrowing, industrial loan growth ex-oil also accelerated to 27.6% YoY (August 2008 data).

Growth in some potentially higher risk segments like real estate, construction, metals, finance companies and credit cards also remains high, and has actually accelerated.

Our recent conversation with banks indicates stress is emerging in exports, driven sectors such as textiles, auto ancillaries, gems & jewellery, commodity sectors, real estate and commercial vehicles.

Bank-wise data shows that BOB, BOI, PNB and SBI have relatively higher export-driven and metals exposure. IOB and Indian have relatively higher real estate/construction exposure, while Canara and Indian have high infrastructure exposure.

Among these stocks, Canara and IOB also have low coverage as well as low Tier I, which is a cause for concern.

In addition, Axis has large non-funded exposure to gems and jewellery segment (~11% of total credit exposure as of March 2008).

Indian Bank and IOB reported large NPLs in real estate portfolio in 2Q. With the recent restructuring guidelines mandating classification of restructured real estate loans as sub-standard, there is clearly a risk of a sharp up-tick in NPLs from this segment in the coming
quarters.

Canara and Indian have relatively high infrastructure exposure, while the SBI group’s exposure to infrastructure is a relatively low 6%, despite its dominating presence in the space. This gives an indication of its balance sheet size and diversity of asset base.

1 comment:

yashkaushab said...

It was a great blog i had ever read.Thanks for sharing the blog, seems to be interesting and informative too.Could you help me finding more detail regarding Third Party Car Insurance Online

Blog Archive

Promote Your Blog

Life Insurance | Health Insurance | Auto Insurance


Investors Please Listen !

 
More than 100 kinds of Insurance products from more than
20 companies under one roof.



Call: 9818269396 
investorspleaselisten@in.com
www.investorspleaselisten.blogspot.com

 

 

Safe Harbor:

The information contained and provided on this Website provides Investment advice for the education of investors. The posts are an information service only. Recommendations, opinions or suggestions are given with the understanding that readers acting on this information assume all risks involved. We do not assume any responsibility or liability resulting from the use of such information, judgment and opinions for Trading or Investment purposes.
Powered by Olark
Advertising Learn to Invest