Financials & FinTech, EM & Southern Europe, Galliano's Latin Notes

Victor Galliano

Financials & FinTech, EM & Southern Europe

Galliano's Latin Notes

The focus of the Galliano's Latin Notes Ltd product is to seek out mis-pricings in the market, on a bottom up basis and focused on long and short calls, in the LatAm and Southern European financials space. In addition, the product explores thematic research opportunities in the banking sector, including FinTech. The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. The aim is to develop more of a contrarian approach to investment research, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of Gordon's Growth Model (GGM) and Sum of the Parts (SOTP) valuation.

Equity Bottom-Up

<ul>
<li>We retain Bank of Baroda as the deep value Indian bank from our peer group, for its modest valuations, healthy ROE and further improvements in pre- and post-provision returns</li>
<li>The market seems unconvinced by HDFC Bank but we retain it as our quality bank pick, with its potential for savings from the HDFC merger and its strong balance sheet</li>
<li>Axis bank stays on our watchlist, but its premium valuations are the challenge; we remain negative on State Bank of India for its delinquency risks and limited progress on returns</li>
</ul>


We retain Bank of Baroda as the deep value Indian bank from our peer group, for its modest valuations, healthy ROE and further improvements in pre- and post-provision returns
The market seems unconvinced by HDFC Bank but we retain it as our quality bank pick, with its potential for savings from the HDFC merger and its strong balance sheet
Axis bank stays on our watchlist, but its premium valuations are the challenge; we remain negative on State Bank of India for its delinquency risks and limited progress on returns


Indian Banks Screener: Stick with Bank of Baroda and HDFC Bank

External broker reports(aggregated public sources), Axis Direct

Axis Direct

External broker reports(aggregated public sources)

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<ul><li>Gross advances reported a robust growth of 17/3% YoY/QoQ.</li><li>The healthy growth in the loan book was driven by retail book growth of ~22/5% YoY/QoQ (Personal loan, up 67/16% YoY/QoQ), Agri loan growth of 14% YoY, and Corporate book growth of 17% YoY.</li><li>Margins reported a sharp decline of 26/20bps to 3.07% due to an increase in the cost of deposit by 24bps QoQ to 4.92%. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Gross advances reported a robust growth of 17/3% YoY/QoQ.The healthy growth in the loan book was driven by retail book growth of ~22/5% YoY/QoQ (Personal loan, up 67/16% YoY/QoQ), Agri loan growth of 14% YoY, and Corporate book growth of 17% YoY.Margins reported a sharp decline of 26/20bps to 3.07% due to an increase in the cost of deposit by 24bps QoQ to 4.92%. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Bank of Baroda - Margins Decline; Advances Growth Momentum Remains Intact

<ul>
<li>We maintain that Bank of Baroda is the stand-out value in this peer group of Indian banks, for its modest valuations, healthy ROE and improving pre- and post-provision returns</li>
<li>We retain HDFC Bank as our higher quality bank pick, with its strong balance sheet, especially on NPA coverage, and potential for improved return from the HDFC merger</li>
<li>Axis bank remains a name to watch, although valuations are not compelling; we remain negative on State Bank of India, and we are also cautious on ICICI Bank</li>
</ul>


We maintain that Bank of Baroda is the stand-out value in this peer group of Indian banks, for its modest valuations, healthy ROE and improving pre- and post-provision returns
We retain HDFC Bank as our higher quality bank pick, with its strong balance sheet, especially on NPA coverage, and potential for improved return from the HDFC merger
Axis bank remains a name to watch, although valuations are not compelling; we remain negative on State Bank of India, and we are also cautious on ICICI Bank


Indian Banks Screener: Bank of Baroda (BOB IN) Remains Stand Out Value

<ul><li>Bank of Baroda (BoB) is the second-largest PSU bank in India and is focused on unlocking its value by improving its retail distribution network and leveraging digitization across the value chain.</li><li>The management is targeting steady advances growth of 14-15% in FY24, outpacing the expected industry growth rate by 1- 2%.</li><li>It expects it to achieve this by increasing the retail mix, which brings higher margins and entails lower risk than the corporate segment, and simultaneously striking the right Asset-Liability management and improving asset quality. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Bank of Baroda (BoB) is the second-largest PSU bank in India and is focused on unlocking its value by improving its retail distribution network and leveraging digitization across the value chain.The management is targeting steady advances growth of 14-15% in FY24, outpacing the expected industry growth rate by 1- 2%.It expects it to achieve this by increasing the retail mix, which brings higher margins and entails lower risk than the corporate segment, and simultaneously striking the right Asset-Liability management and improving asset quality. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Bank of Baroda - Steady Growth with Stable Asset Quality; Poised for Re-Rating!

<ul>
<li>The investor spotlight is on the HDFC Bank-HDFC merger, and we continue to favour HDFC Bank with its positive passive investor momentum, premium returns and merger synergy potential</li>
<li>Bank of Baroda, although not in the limelight like HDFC bank, is our value stand-out among the Indian bank peer group and it warrants increasing investor attention, in our view</li>
<li>Bank of Baroda is delivering on improving asset quality and returns; the shares have positive momentum, and we see great value on its 1x PBV ratio to ROE of 15%</li>
</ul>


The investor spotlight is on the HDFC Bank-HDFC merger, and we continue to favour HDFC Bank with its positive passive investor momentum, premium returns and merger synergy potential
Bank of Baroda, although not in the limelight like HDFC bank, is our value stand-out among the Indian bank peer group and it warrants increasing investor attention, in our view
Bank of Baroda is delivering on improving asset quality and returns; the shares have positive momentum, and we see great value on its 1x PBV ratio to ROE of 15%


Bank of Baroda (BOB IN) – A Diamond in the Rough, on the Sidelines of the HDFC Bank-HDFC Merger

India

Bank of Baroda owns and operates commercial banks in India.  The Group's banks provide the traditional forms of banking services, including CD's, Credit Card services and a variety of car loans, in addition to gold banking and a range of insurance services.  The Group also owns IBU International Finance Limited, an international banking company in Hong Kong.

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Bank Of Baroda (BOB IN)

Indian Banks Screener: Stick with Bank of Baroda and HDFC Bank

We stick with Baroda for its low valuations and strong returns, and with quality pick HDFC Bank despite share weakness. Axis Bank is on the watch...

Victor Galliano

Bank of Baroda - Margins Decline; Advances Growth Momentum Remains Intact

The healthy growth in the loan book was driven by retail book growth of ~22/5% YoY/QoQ (Personal loan, up 67/16% YoY/QoQ), Agri loan growth of 14% YoY

Axis Direct

Indian Banks Screener: Bank of Baroda (BOB IN) Remains Stand Out Value

Bank of Baroda is the top value pick from our Indian banks screens, while HDFC Bank is the high quality name. Axis Bank is worth watching, but we...

Victor Galliano

Bank of Baroda - Steady Growth with Stable Asset Quality; Poised for Re-Rating!

The management is targeting steady advances growth of 14-15% in FY24, outpacing the expected industry growth rate by 1- 2%.

Axis Direct