Specialist in Indian Banking and Economic Research

Hemindra Hazari

Even in the rowdy game of football, two yellow cards result in dismissal from the field of play. Indian banking, though, adheres to lower standards. For two consecutive years, Axis Bank has been exposed by the regulator for mis-reporting in its financial statements; yet the bank’s board of directors has allowed the same chief executive officer (CEO), chief financial officer (CFO) and auditor to continue in their posts. Apparently, the banking regulator has a high tolerance for banks disregarding its instructions and under-reporting non-performing assets, as to date no action has been taken against the concerned individuals at Axis Bank. Even normally docile analysts could be heard openly questioning the management during the 2QFY2018 results conference call on the numbers reported by the bank; one implied whether the bank might score a hat-trick in misreporting its financials for FY2018 as well. With such a dismal track record, analyzing the bank’s results becomes meaningless.

Even in the rowdy game of football, two yellow cards result in dismissal from the field of play. Indian banking, though, adheres to lower standards. For two consecutive years, Axis Bank has been exposed by the regulator for mis-reporting in its financial statements; yet the bank’s board of directors has allowed the same chief executive officer (CEO), chief financial officer (CFO) and auditor to continue in their posts. Apparently, the banking regulator has a high tolerance for banks disregarding its instructions and under-reporting non-performing assets, as to date no action has been taken against the concerned individuals at Axis Bank. Even normally docile analysts could be heard openly questioning the management during the 2QFY2018 results conference call on the numbers reported by the bank; one implied whether the bank might score a hat-trick in misreporting its financials for FY2018 as well. With such a dismal track record, analyzing the bank’s results becomes meaningless.

Axis Bank's Nose Grows and Grows and Grows

Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

Thematic (Sector/Industry)

India’s economy continues to slow. Yet, many of India’s banks are expanding credit aggressively. The risk is that new debtors are not expecting a protracted deceleration in the overall economy – or more succinctly, their revenue, their income. Loan seasoning risks are highest with some of the safest banks. <a href="https://www.smartkarma.com/entities/558" target="_blank" data-smartkarma-citation="entities:558:1">HDFC Bank Limited (HDFCB IN)</a> stands out.India’s real GDP growth for June 2017 came in at 5.7%. This is the fifth consecutive quarter of deceleration in the pace of growth.  This is fine, and…

India’s economy continues to slow. Yet, many of India’s banks are expanding credit aggressively. The risk is that new debtors are not expecting a protracted deceleration in the overall economy – or more succinctly, their revenue, their income. Loan seasoning risks are highest with some of the safest banks. HDFC Bank Limited (HDFCB IN) stands out.India’s real GDP growth for June 2017 came in at 5.7%. This is the fifth consecutive quarter of deceleration in the pace of growth.  This is fine, and…

Fast Growing Banks, Amidst Slowing Growth: India

The surge in non-performing assets (NPAs) in the Indian banking industry disguises a lesser known issue of a larger percentage surge in bad loans from the overseas branches of banks, particularly from select new private sector banks having significant foreign ownership. While the growth in overseas NPAs is from a low base as compared with domestic NPAs, the quantum is not insignificant. Some of the banks adventurously ventured into overseas markets, but, it appears, ended up extending foreign currency loans to highly leveraged Indian companies, which may have resulted in significant contamination of their overseas portfolio and consequently a belated contraction of their overseas assets.

The surge in non-performing assets (NPAs) in the Indian banking industry disguises a lesser known issue of a larger percentage surge in bad loans from the overseas branches of banks, particularly from select new private sector banks having significant foreign ownership. While the growth in overseas NPAs is from a low base as compared with domestic NPAs, the quantum is not insignificant. Some of the banks adventurously ventured into overseas markets, but, it appears, ended up extending foreign currency loans to highly leveraged Indian companies, which may have resulted in significant contamination of their overseas portfolio and consequently a belated contraction of their overseas assets.

Post the Bharatiya Janata Party’s (BJP) decisive victory in the Uttar Pradesh (UP) state elections, alarm bells have commenced tolling in the capital market.  The cause for concern is the BJP’s promise to the UP electorate to waive off all farm loans and provide fresh loans at zero per cent interest. Media, capital market analysts and prominent bankers have jumped on the bandwagon of moral hazard, ruining the loan payment discipline amongst farmers and apprehensions that the sacrosanct fiscal deficit may be breached as a consequence of such ‘populist’ policies. The BJP electoral promise raises some issues which need to be explored further on whether the central government has the fiscal space to provide for a total farm waiver and whether the criticism of moral hazard is credible.

Post the Bharatiya Janata Party’s (BJP) decisive victory in the Uttar Pradesh (UP) state elections, alarm bells have commenced tolling in the capital market.  The cause for concern is the BJP’s promise to the UP electorate to waive off all farm loans and provide fresh loans at zero per cent interest. Media, capital market analysts and prominent bankers have jumped on the bandwagon of moral hazard, ruining the loan payment discipline amongst farmers and apprehensions that the sacrosanct fiscal deficit may be breached as a consequence of such ‘populist’ policies. The BJP electoral promise raises some issues which need to be explored further on whether the central government has the fiscal space to provide for a total farm waiver and whether the criticism of moral hazard is credible.

U.P. Loan Waiver: 'Populist' or a Necessity?

Asia focused research insights & advisory, Asia Advisors

Vinay Patel

Asia focused research insights & advisory

Asia Advisors

Asia Advisors is an independent financial advisory and research firm working closely with corporates and institutions to provide consulting solutions & research insights. We provide advisory services including capital solutions, business strategy and investment insights.
Firm is headed by Vinay Patel who has close to two decades of experience in research and business development at large, international investment banks such as HSBC and ICICI Securities. Led research efforts in areas of Macroeconomics, Asset Allocation & Investment Strategy for close to a decade in global & domestic research teams. As a business head in Singapore, advised top global investment management firms & Portfolio managers in Asia for India related investments.
Vinay was recently joined by Swapnil Manish, an investment banker and ex-ecommerce entrepreneur with more than 12 years of experience. Swapnil was the TMT banker at BNP Paribas and was part of several large M&A and ECM transactions (Bharti-Zain, Bharti Infratel IPO, Schneider-Zicom among several others). He's also had a stint as an ecommerce entrepreneur having launched & led Mumbai's first online grocery player.

Expectations on economic reforms from Modi government are running high after the big win in Uttar Pradesh. Political analysts are expecting this win to ease Modi's chances for another term at national elections in 2019 and that would give him total 7 year period to push for reforms (In his victory speech Modi himself said he is now looking for delivering by 2022 - the 75th year of Indian Independence). Amidst the euphoria of Modi's victory, we would like to highlight some of the ground realities…

Expectations on economic reforms from Modi government are running high after the big win in Uttar Pradesh. Political analysts are expecting this win to ease Modi's chances for another term at national elections in 2019 and that would give him total 7 year period to push for reforms (In his victory speech Modi himself said he is now looking for delivering by 2022 - the 75th year of Indian Independence). Amidst the euphoria of Modi's victory, we would like to highlight some of the ground realities…

Investors Need To Be Patient With Reform Momentum Even As Modi Win Ensures Policy Continuity

India

Bank of India, through its subsidiaries, provides corporate, commercial, personal banking, retail, rural, and development banking.  The Group specializes its services towards corporate and medium businesses, in addition to upmarket retail customers.

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Bank Of India (BOI IN)

Axis Bank's Nose Grows and Grows and Grows

Even in the rowdy game of football, two yellow cards result in dismissal from the field of play. Indian banking, though, adheres to lower...

Hemindra Hazari

Fast Growing Banks, Amidst Slowing Growth: India

India’s economy continues to slow. Yet, many of India’s banks are expanding credit aggressively. The risk is that new debtors are not expecting a...

Daniel Tabbush

Chickens Abroad Come Home to Roost

The surge in non-performing assets (NPAs) in the Indian banking industry disguises a lesser known issue of a larger percentage surge in bad loans...

Hemindra Hazari

U.P. Loan Waiver: 'Populist' or a Necessity?

Post the Bharatiya Janata Party’s (BJP) decisive victory in the Uttar Pradesh (UP) state elections, alarm bells have commenced tolling in the...

Hemindra Hazari

Investors Need To Be Patient With Reform Momentum Even As Modi Win Ensures Policy Continuity

Expectations on economic reforms from Modi government are running high after the big win in Uttar Pradesh. Political analysts are expecting this...

Asia Advisors

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