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

Equity Bottom-Up

<ul>
<li>SBI results were highly managed in FY 2Q22, and going forward it’s difficult for anyone to take both these results and this bank very seriously; </li>
<li>SBI reported FY 3Q22 results of INR 84.3 bn, improving INR 8.1 bn (10.6%) linked quarter. Volatility between loss provisions and operating expenses continued; and </li>
<li>Net new NPLs accelerated 18.5% annualized, and SBI’s reserves are short INR 568 tn – over five quarters of pre-tax results. </li>
</ul>


SBI results were highly managed in FY 2Q22, and going forward it’s difficult for anyone to take both these results and this bank very seriously; 
SBI reported FY 3Q22 results of INR 84.3 bn, improving INR 8.1 bn (10.6%) linked quarter. Volatility between loss provisions and operating expenses continued; and 
Net new NPLs accelerated 18.5% annualized, and SBI’s reserves are short INR 568 tn – over five quarters of pre-tax results. 


State Bank of India – Rules Don’t Apply

Housing Development Finance Corporation / Equity Bottom-Up

Housing Development Finance Corporation (HDFC IN)

<ul>
<li>HDFC Ltd (HDFC.IN) [HDFC] reported FY 3Q22 results of INR 30.5 bn, decreasing INR 6.2 bn (16.9%) linked quarter basis reflecting a lack of dividends received; </li>
<li>Given the INR 4.2 bn in NCO during FY 3Q22, net new NPLs increased INR 11.7 bn or 23.3% on an annualized basis; and </li>
<li>We also find that HDFC’s reserve still needs shoring up by another INR 185 bn or over a year of PBT.   </li>
</ul>


HDFC Ltd (HDFC.IN) [HDFC] reported FY 3Q22 results of INR 30.5 bn, decreasing INR 6.2 bn (16.9%) linked quarter basis reflecting a lack of dividends received; 
Given the INR 4.2 bn in NCO during FY 3Q22, net new NPLs increased INR 11.7 bn or 23.3% on an annualized basis; and 
We also find that HDFC’s reserve still needs shoring up by another INR 185 bn or over a year of PBT.   


<ul>
<li>IndusInd reported FY 3Q22 bottom-line results improved 4.8% linked quarter, driven by stronger core revenues and a lower provision; </li>
<li>NCOs remain elevated and show no sign of abating, and net new NPLs increased 31.6% annualized; and </li>
<li>IndusInd’s reserve needs to increase closer to 75% with a shortfall of INR 30 bn – representing two quarters of pre-tax results. </li>
</ul>


IndusInd reported FY 3Q22 bottom-line results improved 4.8% linked quarter, driven by stronger core revenues and a lower provision; 
NCOs remain elevated and show no sign of abating, and net new NPLs increased 31.6% annualized; and 
IndusInd’s reserve needs to increase closer to 75% with a shortfall of INR 30 bn – representing two quarters of pre-tax results. 


<ul>
<li>ICICI reported FY 3Q22 earnings of INR 61.9 bn, increasing INR 6.8 bn (12.4%) linked quarter, driven by net interest and fee improvement and a provision cut;  </li>
<li>Net new NPLs continued to increase 11.4% on an annualized basis at FY 3Q22 versus INR 44.1 bn 43.7% at FY 3Q21; and    </li>
<li>We find that ICICI is short on reserves to the tune of INR 116 bn or just over a half year of ICICI’s core operating result. </li>
</ul>


ICICI reported FY 3Q22 earnings of INR 61.9 bn, increasing INR 6.8 bn (12.4%) linked quarter, driven by net interest and fee improvement and a provision cut;  
Net new NPLs continued to increase 11.4% on an annualized basis at FY 3Q22 versus INR 44.1 bn 43.7% at FY 3Q21; and    
We find that ICICI is short on reserves to the tune of INR 116 bn or just over a half year of ICICI’s core operating result. 


<ul>
<li>
Axis Bank (AXSB.IN) [Axis] has become the frontrunner to purchase Citigroup’s (C.US) India [Citi India] consumer business; </li>
<li>The Citi India transaction would represent a negative adjusted net spread of 41 bp for Axis – intimating a negative return on investment of 1.0%; and </li>
<li>As many customers have hit the exit button, we have already witnessed Citi India's retail loan portfolio decline 6.7% YOY prior to FY 2022 COVID-19 protocols. </li>
</ul>



Axis Bank (AXSB.IN) [Axis] has become the frontrunner to purchase Citigroup’s (C.US) India [Citi India] consumer business; 
The Citi India transaction would represent a negative adjusted net spread of 41 bp for Axis – intimating a negative return on investment of 1.0%; and 
As many customers have hit the exit button, we have already witnessed Citi India's retail loan portfolio decline 6.7% YOY prior to FY 2022 COVID-19 protocols. 


India

iShares MSCI India Index ETF is an exchange-traded fund registered in Singapore. The Fund seeks to provide investment results that, before expenses, closely correspond to the performance of the MSCI India Index. The Fund invests all or substantially all of its assets in shares comprising the MSCI India Index in substantially the same weightings as constituted in the underlying index.

iShares MSCI India Index ETF (INDIA SP)

State Bank of India – Rules Don’t Apply

SBI: It’s difficult for anyone to take this bank very seriously. SBI reported a QOQ FY 3Q22 results increase of 10.6%, as volatility between loss...

Thomas J. Monaco

HDFC Ltd. – Lack of Conservatism

HDFC: HDFC reported FY 3Q22 results decline of 16.9% QOQ. Net new NPLs increased 23.3% on an annualized basis, and HDFC’s reserve still needs...

Thomas J. Monaco

IndusInd Bank – Stabilizing Somewhat

INDUSIND BANK: IndusInd reported FY 3Q22 bottom-line results improvement of 4.8% linked quarter, driven by stronger core revenues. NCOs remain...

Thomas J. Monaco

ICICI Bank – Continued Improvement

ICICI BANK: ICICI FY 3Q22 earnings increased 12.4% QOQ driven by net interest income and fee improvement and a provision cut. ICICI is still short...

Thomas J. Monaco

Axis Bank – Lost In The Citi

AXIS: Axis has become the frontrunner to purchase Citi India's consumer business. This deal would result in a negative ROI of 1.0% to Axis.

Thomas J. Monaco