Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Last Week in Event SPACE: NTT Docomo, Car, Sunac Services, Evergrande, Jardine Cycle, PRC Antitrust

Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

<a href="https://www.smartkarma.com/entities/kotak-mahindra-bank-ltd" target="_blank" data-smartkarma-citation="entities:126:1" rel="noopener">Kotak Mahindra Bank (KMB IN)</a> it seeing an impulse rally sequence that bodes will for a new chart high after a near term rest. The focus of this insight is to pinpoint fresh buy support a push higher.Buy volumes are supportive to buy a dip.1,570/1,600 breakout point will now act as fresh support. The 3-day push needs a rest near 1,720-30 old high resistance.MACD macro breakout above old highs is a stand out chart feature that not only supports a move to new highs but lays out a new and higher trading range.

Kotak Mahindra Bank (KMB IN) it seeing an impulse rally sequence that bodes will for a new chart high after a near term rest. The focus of this insight is to pinpoint fresh buy support a push higher.Buy volumes are supportive to buy a dip.1,570/1,600 breakout point will now act as fresh support. The 3-day push needs a rest near 1,720-30 old high resistance.MACD macro breakout above old highs is a stand out chart feature that not only supports a move to new highs but lays out a new and higher trading range.

Silver Point

Thomas J. Monaco

Independent Insight Provider

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

*Results Supported By Premature Provision Cut: State Bank of India (SBIN.IN) [SBI] reported FY 2Q21 results of INR 45.7 bn, increasing INR 3.8 bn (9.2%) linked quarter. Results were even better when we exclude the FY 1Q21 exceptional gain of INR 15.4 bn – increasing INR 19.2 bn or 72.6% linked quarter. Results were driven by three factors: a) net interest income improvement of INR 15.4 bn (5.8%) due primarily to NIM improvement of 8 bp to 2.96%; b) a loan loss provision decline of INR 18.1 bn (16.0%) despite much weaker credit metrics; and c) non-interest income improvement of INR 5.7 bn (7.2%); and* Credit Risk and Weak Cover: By our calculation, we find net new NPL growth of INR 144.0 bn or 44.4% on an annualized basis and that the annualized NCO rate of 66 bp – which are quite troublesome even for an SOE bank. We also find that reserves are light in the neighborbood of INR 1.1 tn  - nearly four years of pre-tax results or 61% of market-cap.

*Results Supported By Premature Provision Cut: State Bank of India (SBIN.IN) [SBI] reported FY 2Q21 results of INR 45.7 bn, increasing INR 3.8 bn (9.2%) linked quarter. Results were even better when we exclude the FY 1Q21 exceptional gain of INR 15.4 bn – increasing INR 19.2 bn or 72.6% linked quarter. Results were driven by three factors: a) net interest income improvement of INR 15.4 bn (5.8%) due primarily to NIM improvement of 8 bp to 2.96%; b) a loan loss provision decline of INR 18.1 bn (16.0%) despite much weaker credit metrics; and c) non-interest income improvement of INR 5.7 bn (7.2%); and* Credit Risk and Weak Cover: By our calculation, we find net new NPL growth of INR 144.0 bn or 44.4% on an annualized basis and that the annualized NCO rate of 66 bp – which are quite troublesome even for an SOE bank. We also find that reserves are light in the neighborbood of INR 1.1 tn  - nearly four years of pre-tax results or 61% of market-cap. 

State Bank of India – Credit Continues To Fall Off A Cliff

*All Good: Housing Development Finance Corp. (HDFC.IN) [HDFC] reported FY 2Q21 bottom-line results of INR 33.7 bn - increasing INR 3.8 bn (12.6%) linked quarter. From a core operating perspective, we note that HDFC came in at INR 32.0 bn, a whopping INR 15.5 bn (93.4%) increase over FY 1Q21.*Credit Risk Decelerating: The trend in annualized NCOs has declined, by our calculation, to 16 bp from 21 bp in the previous quarter. In addition, the level of net new NPLs has also decelerated to INR 3.6 bn or 14.2% on an annualized basis versus 46.6% in FY 1Q21. We would have preferred that HDFC remained more vigilant given the continued uncertainty with COVID-19. As such, we still find that HDFC’s reserve still needs shoring up by another INR 68 bn or just over two quarters of core operating results; and*Positive Operating Jaws: . Key to core operating result performance was: a) net interest income improvement of INR 2.8 bn (8.3%) led by both linked quarter loan growth of 2.0% and NIM improvement of 17 bp to 2.75%; b) an INT 306 mn (7.7%) decline in operating expenses which pushed HDFC’s C/I ratio even lower by 160 bp to 9.2%.

*All Good: Housing Development Finance Corp. (HDFC.IN) [HDFC] reported FY 2Q21 bottom-line results of INR 33.7 bn - increasing INR 3.8 bn (12.6%) linked quarter. From a core operating perspective, we note that HDFC came in at INR 32.0 bn, a whopping INR 15.5 bn (93.4%) increase over FY 1Q21.*Credit Risk Decelerating: The trend in annualized NCOs has declined, by our calculation, to 16 bp from 21 bp in the previous quarter. In addition, the level of net new NPLs has also decelerated to INR 3.6 bn or 14.2% on an annualized basis versus 46.6% in FY 1Q21. We would have preferred that HDFC remained more vigilant given the continued uncertainty with COVID-19. As such, we still find that HDFC’s reserve still needs shoring up by another INR 68 bn or just over two quarters of core operating results; and*Positive Operating Jaws: . Key to core operating result performance was: a) net interest income improvement of INR 2.8 bn (8.3%) led by both linked quarter loan growth of 2.0% and NIM improvement of 17 bp to 2.75%; b) an INT 306 mn (7.7%) decline in operating expenses which pushed HDFC’s C/I ratio even lower by 160 bp to 9.2%.

Housing Development Finance Corp. – “Great Quarter Guys”

*Manufactured Improvement: IndusInd Bank (IIB.IB) [IndusInd] reported FY 2Q21 bottom-line results of INR 6.5 bn, improving INR 1.9 bn (40.5%) linked quarter. Like most other banks in India, IndusInd cut its loan loss provision INR 2.9 bn or 13.0% on a linked quarter basis – driving FY2Q21 bottom-line – a bizarre move given the accelerated levels of NPL creation which no doubt will be reversed going forward; and*Credit Weaker, Not Better: You can dress IndusInd up and put as much make-up on as you like but at the end of the day – credit is ugly. NCOs of INR 18.4 bn amount to 3.72% on an annualized basis, while net new NPLs are increasing at a 117.5%. From our vantage point, we find that IndusInd’s reserve needs to be more than tripled with a shortfall of INR 75.7 bn – representing nine quarters of pre-tax results if you believe the FY 2Q21 result wasn’t manufactured – or 17.0% of market cap. This is a problem, as IndusInd’s CET 1 at 14.5% is substantially still lower than the CET 1 ratio of the large private banks (18% on an average).

*Manufactured Improvement: IndusInd Bank (IIB.IB) [IndusInd] reported FY 2Q21 bottom-line results of INR 6.5 bn, improving INR 1.9 bn (40.5%) linked quarter. Like most other banks in India, IndusInd cut its loan loss provision INR 2.9 bn or 13.0% on a linked quarter basis – driving FY2Q21 bottom-line – a bizarre move given the accelerated levels of NPL creation which no doubt will be reversed going forward; and*Credit Weaker, Not Better: You can dress IndusInd up and put as much make-up on as you like but at the end of the day – credit is ugly. NCOs of INR 18.4 bn amount to 3.72% on an annualized basis, while net new NPLs are increasing at a 117.5%. From our vantage point, we find that IndusInd’s reserve needs to be more than tripled with a shortfall of INR 75.7 bn – representing nine quarters of pre-tax results if you believe the FY 2Q21 result wasn’t manufactured – or 17.0% of market cap. This is a problem, as IndusInd’s CET 1 at 14.5% is substantially still lower than the CET 1 ratio of the large private banks (18% on an average).

IndusInd Bank – Now Dealing With Negative Operating Jaws

India

Kotak Mahindra Bank Limited is a full service commercial bank. The Bank offers a wide range of products and services such as personal, commercial, and corporate banking services, including deposit accounts, loans, and investments. Kotak Mahindra Bank serves customers in India.

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Kotak Mahindra Bank (KMB IN)

Last Week in Event SPACE: NTT Docomo, Car, Sunac Services, Evergrande, Jardine Cycle, PRC Antitrust

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

Kotak Mahindra Bank Buy

Kotak Mahindra Bank (KMB IN) it seeing an impulse rally sequence that bodes will for a new chart high after a near term rest. 1,570/1,600 breakout...

Thomas Schroeder

State Bank of India – Credit Continues To Fall Off A Cliff

STATE BANK OF INDIA: Costs Increasing, Credit Deteriorating, Reserve Cover Declining. This Is A Recipe For A Massive Capital Raise.

Thomas J. Monaco

Housing Development Finance Corp. – “Great Quarter Guys”

HOUSING DEVELOPMENT FINANCE CORP: Positive Operating Jaws Were Just An Outgrowth Of This Well Oiled Machine. Credit Risk Too Substantially...

Thomas J. Monaco

IndusInd Bank – Now Dealing With Negative Operating Jaws

INDUSIND BANK: IndusInd Remains Challenged With Accelerating NPL Formation, And Poor Coverage. However, Negative Operating Jaws Are Now A New Twist.

Thomas J. Monaco

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