Derivatives and Quantitative Strategist

Gaudenz Schneider

Equity Bottom-Up

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Context: This Insight follows up on previously highlighted relative value opportunities, using a statistical methodology based on mean-reversion to identify opportunities in paired securities.</li>
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Highlights: Currently 17 pair trade opportunities persist across six markets and nine sectors.
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Why read: Statistical analysis offers a unique perspective on relative value. Gain insights into actionable statistical pair trade opportunities and monitor performance of previously highlighted pairs.</li>
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Context: This Insight follows up on previously highlighted relative value opportunities, using a statistical methodology based on mean-reversion to identify opportunities in paired securities.

Highlights: Currently 17 pair trade opportunities persist across six markets and nine sectors.


Why read: Statistical analysis offers a unique perspective on relative value. Gain insights into actionable statistical pair trade opportunities and monitor performance of previously highlighted pairs.


Relative Value Opportunities in Asia-Pac, Pair Trade Roundup (29 June 2026)

Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Thematic (Sector/Industry)

* RBI Failure To Think Through Moratorium Leads To Continued Uncertainty for India: On September 3, 2020, the Supreme Court of India held a hearing on interest rate waivers for loans under moratorium granted by the Reserve Bank of India (RBI). On September 10th, the Supreme Court clarified: a) the matter under discussion is related to interest on interest payments and not on the interest payments themselves; and b) that banks should not classify loans as NPL for another two month period, if they were not classified NPLs on August 31st.. On October 5th, the Supreme Court required additional information on the case; and   *Further Clarification Expected October 13th.  The Supreme Court, however, stated that it is inclined to waive interest on interest payments for loans under moratorium loans; and that it will need to study the potential relief measures put forth by the RBI and government and take appropriate action. In the meantime, the Supreme Court has each to file all related documents decisions related to interest/moratoriums with the Court over next couple of weeks. We expect further clarity at the next hearing on October 13th – and are hopeful that this will be the final hearing.

* RBI Failure To Think Through Moratorium Leads To Continued Uncertainty for India: On September 3, 2020, the Supreme Court of India held a hearing on interest rate waivers for loans under moratorium granted by the Reserve Bank of India (RBI). On September 10th, the Supreme Court clarified: a) the matter under discussion is related to interest on interest payments and not on the interest payments themselves; and b) that banks should not classify loans as NPL for another two month period, if they were not classified NPLs on August 31st.. On October 5th, the Supreme Court required additional information on the case; and   *Further Clarification Expected October 13th.  The Supreme Court, however, stated that it is inclined to waive interest on interest payments for loans under moratorium loans; and that it will need to study the potential relief measures put forth by the RBI and government and take appropriate action. In the meantime, the Supreme Court has each to file all related documents decisions related to interest/moratoriums with the Court over next couple of weeks. We expect further clarity at the next hearing on October 13th – and are hopeful that this will be the final hearing.  

Reserve Bank of India - No Good Deed Goes Unpunished

* RBI Failure To Think Through Moratorium Leads To Continued Uncertainty for India: On September 3, 2020, the Supreme Court of India held a hearing on interest rate waivers for loans under moratorium granted by the Reserve Bank of India (RBI). On September 10th, the Supreme Court clarified: a) the matter under discussion is related to interest on interest payments and not on the interest payments themselves; and b) that banks should not classify loans as NPL for another two month period, if they were not classified NPLs on August 31st; and*Further Clarification Expected September 28th.  The Supreme Court, however, stated that it is inclined to waive interest on interest payments for loans under moratorium loans; and that it will need to study the potential relief measures put forth by the RBI and government and take appropriate action. In the meantime, the Supreme Court has each to file all related documents decisions related to interest/moratoriums with the Court over next couple of weeks. We expect further clarity at the next hearing on September 28th.

* RBI Failure To Think Through Moratorium Leads To Continued Uncertainty for India: On September 3, 2020, the Supreme Court of India held a hearing on interest rate waivers for loans under moratorium granted by the Reserve Bank of India (RBI). On September 10th, the Supreme Court clarified: a) the matter under discussion is related to interest on interest payments and not on the interest payments themselves; and b) that banks should not classify loans as NPL for another two month period, if they were not classified NPLs on August 31st; and*Further Clarification Expected September 28th.  The Supreme Court, however, stated that it is inclined to waive interest on interest payments for loans under moratorium loans; and that it will need to study the potential relief measures put forth by the RBI and government and take appropriate action. In the meantime, the Supreme Court has each to file all related documents decisions related to interest/moratoriums with the Court over next couple of weeks. We expect further clarity at the next hearing on September 28th. 

Reserve Bank of India – Toothless Tiger

* RBI Failure To Think Through Moratorium Lands Them In Court. On September 3, 2020, the Supreme Court of India held a hearing on interest rate waivers for loans under moratorium granted by the Reserve Bank of India (RBI) and ruled on an interim basis that loans not declared NPL on August 31, 2020 will not be declared NPL until further notice; and*Clarification Expected September 10th. The Supreme Court noted that the RBI will have to give clarification on the interest being charged to bank customers, as the moratorium and penal interest cannot together. We await the RBI response, and would expect the RBI to clarify that interest on interest in the case of moratorium loans is not penal interest at the next next Supreme Court hearing, which will be held on September 10th.

* RBI Failure To Think Through Moratorium Lands Them In Court. On September 3, 2020, the Supreme Court of India held a hearing on interest rate waivers for loans under moratorium granted by the Reserve Bank of India (RBI) and ruled on an interim basis that loans not declared NPL on August 31, 2020 will not be declared NPL until further notice; and*Clarification Expected September 10th. The Supreme Court noted that the RBI will have to give clarification on the interest being charged to bank customers, as the moratorium and penal interest cannot together. We await the RBI response, and would expect the RBI to clarify that interest on interest in the case of moratorium loans is not penal interest at the next next Supreme Court hearing, which will be held on September 10th. 

Reserve Bank of India – Ooops We Did It Again

Specialist in Indian Banking and Economic Research

Hemindra Hazari

The near-absence of a government stimulus to revive the Indian economy from the Covid-19 meltdown portends a severe and prolonged economic slowdown. This will squarely hit the banking industry with huge credit costs and low growth. In such a dismal scenario, the only lever available to the banks is cost management: to reduce costs and to leverage the existing cost structure to generate more business. In both respects, banks would have to adopt a revised business model: successfully implementing digitisation, which would entail re-engineering processes, developing new businesses and  taking market share from other banks must take precedence to reduction in headcount; salary cuts (starting from the bloated remuneration given to senior management); and a re-examination of overheads. As compared with government banks, private sector banks have a higher component of non-staff costs to staff costs, on account of the incentives they pay to direct sales agents (DSAs) and for business processing outsourcing (BPO); for government banks such work is done by their own staff. In the 1QFY2021 it would appear that banks have commenced cost cutting measures, as they reported a decline in non-staff operating expenses. However, management commentary claimed that this was on account of the loss in business, which resulted in lower expenses related to the business, such as sourcing fees and commissions to direct sales agents (DSA). But nevertheless the banks in our sample, with the exception of <a href="https://www.smartkarma.com/entities/indusind-bank-ltd" target="_blank" data-smartkarma-citation="entities:1558:1" rel="noopener">Indusind Bank (IIB IN)</a>, reported improvements in the cost-to-income (excluding domestic treasury profits) ratio.While the 1QFY2021 results reveal that the banks are aware of the importance of cost management, a lot more has to be done as credit costs in the coming days rise sharply. The only lever available to management to prop up profits in the face of the inevitable economic slowdown is to hasten the process of digitisation, thereby reducing headcount, develop new business verticals and slash salaries. Shareholders therefore need to closely monitor cost-to-income ratios stripped of treasury profits to determine which banks are successfully implementing cost management and digitalisation.

The near-absence of a government stimulus to revive the Indian economy from the Covid-19 meltdown portends a severe and prolonged economic slowdown. This will squarely hit the banking industry with huge credit costs and low growth. In such a dismal scenario, the only lever available to the banks is cost management: to reduce costs and to leverage the existing cost structure to generate more business. In both respects, banks would have to adopt a revised business model: successfully implementing digitisation, which would entail re-engineering processes, developing new businesses and  taking market share from other banks must take precedence to reduction in headcount; salary cuts (starting from the bloated remuneration given to senior management); and a re-examination of overheads. As compared with government banks, private sector banks have a higher component of non-staff costs to staff costs, on account of the incentives they pay to direct sales agents (DSAs) and for business processing outsourcing (BPO); for government banks such work is done by their own staff. In the 1QFY2021 it would appear that banks have commenced cost cutting measures, as they reported a decline in non-staff operating expenses. However, management commentary claimed that this was on account of the loss in business, which resulted in lower expenses related to the business, such as sourcing fees and commissions to direct sales agents (DSA). But nevertheless the banks in our sample, with the exception of Indusind Bank (IIB IN), reported improvements in the cost-to-income (excluding domestic treasury profits) ratio.While the 1QFY2021 results reveal that the banks are aware of the importance of cost management, a lot more has to be done as credit costs in the coming days rise sharply. The only lever available to management to prop up profits in the face of the inevitable economic slowdown is to hasten the process of digitisation, thereby reducing headcount, develop new business verticals and slash salaries. Shareholders therefore need to closely monitor cost-to-income ratios stripped of treasury profits to determine which banks are successfully implementing cost management and digitalisation.

For Banks, Cost Management Is the Only Way of Surviving the Long Slump

India

YES BANK Limited provides banking services. The Bank offers deposits, personal loans, e-banking, trade finance, corporate, and business banking services. YES BANK serves the food and agribusiness, life sciences, healthcare, biotechnology, telecommunications, media, information technology, and infrastructure development industries in India.

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Yes Bank (YES IN)

Relative Value Opportunities in Asia-Pac, Pair Trade Roundup (29 June 2026)

Discover 17 pair trade opportunities across six markets and nine sectors using statistical mean-reversion methodology for actionable insights.

Gaudenz Schneider

Reserve Bank of India - No Good Deed Goes Unpunished

* RBI Failure To Think Through Moratorium Leads To Continued Uncertainty for India: On September 3, 2020, the Supreme Court of India held a hearing...

Thomas J. Monaco

Reserve Bank of India – Toothless Tiger

* RBI Failure To Think Through Moratorium Leads To Continued Uncertainty for India: On September 3, 2020, the Supreme Court of India held a hearing...

Thomas J. Monaco

Reserve Bank of India – Ooops We Did It Again

* RBI Failure To Think Through Moratorium Lands Them In Court. On September 3, 2020, the Supreme Court of India held a hearing on interest rate...

Thomas J. Monaco

For Banks, Cost Management Is the Only Way of Surviving the Long Slump

Banks need to develop new businesses, take market share from other banks, reduce overheads which must take precedence to reduction in headcount.

Hemindra Hazari

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Relative Value Opportunities in Asia-Pac, Pair Trade Roundup (29 June 2026)

​Discover 17 pair trade opportunities across six markets and nine sectors using statistical mean-reversion methodology for actionable insights.

Gaudenz Schneider

Reserve Bank of India - No Good Deed Goes Unpunished

* RBI Failure To Think Through Moratorium Leads To Continued Uncertainty for India: On September 3, 2020, the Supreme Court of India held a hearing...

Thomas J. Monaco

Reserve Bank of India – Toothless Tiger

* RBI Failure To Think Through Moratorium Leads To Continued Uncertainty for India: On September 3, 2020, the Supreme Court of India held a hearing...

Thomas J. Monaco

Reserve Bank of India – Ooops We Did It Again

* RBI Failure To Think Through Moratorium Lands Them In Court. On September 3, 2020, the Supreme Court of India held a hearing on interest rate...

Thomas J. Monaco

For Banks, Cost Management Is the Only Way of Surviving the Long Slump

Banks need to develop new businesses, take market share from other banks, reduce overheads which must take precedence to reduction in headcount.

Hemindra Hazari

Discover 17 pair trade opportunities across six markets and nine sectors using statistical mean-reversion methodology for actionable insights.