Specialist in Indian Banking and Economic Research

Hemindra Hazari

State Bank of India (SBI), the nation’s largest and the government’s premier bank, reported a consolidated 4Q loss of Rs30bn and an annual profit of only Rs2.4bn as compared with a Bloomberg full-year consensus estimate of Rs69bn. Worse, in the elaborate press and analysts’ presentation, there is no mention nor any explanation provided for this unexpected loss which has arisen on account of the bank’s five banking subsidiaries which were merged from April 1, 2017. The lack of transparency is compounded with the issue of corporate governance and accountability as these subsidiaries were under the direct managerial control of SBI and their deterioration in financial performance is a reflection on SBI’s senior management. It is now apparent that the merger of the bank subsidiaries was not a grand design in bank consolidation in India but to bail-out the poorly managed banks.  Digesting these huge losses will add to the operational problems of integrating these banks within SBI and dark days may lie ahead for the banking behemoth.

State Bank of India (SBI), the nation’s largest and the government’s premier bank, reported a consolidated 4Q loss of Rs30bn and an annual profit of only Rs2.4bn as compared with a Bloomberg full-year consensus estimate of Rs69bn. Worse, in the elaborate press and analysts’ presentation, there is no mention nor any explanation provided for this unexpected loss which has arisen on account of the bank’s five banking subsidiaries which were merged from April 1, 2017. The lack of transparency is compounded with the issue of corporate governance and accountability as these subsidiaries were under the direct managerial control of SBI and their deterioration in financial performance is a reflection on SBI’s senior management. It is now apparent that the merger of the bank subsidiaries was not a grand design in bank consolidation in India but to bail-out the poorly managed banks.  Digesting these huge losses will add to the operational problems of integrating these banks within SBI and dark days may lie ahead for the banking behemoth.

SBI – Huge 4QFY2017 Losses, Dark Days Ahead

Asia-Focused Industry Research, Speeda Research

Speeda

Asia-Focused Industry Research

Speeda Research

Speeda Research analysts cover China, Japan, India and SEA on the latest trends and topics. We have analysts of diverse nationalities who are able to access information in their respective local languages to provide customers with comprehensive reports. With access to private company data in these regions, Speeda Research is also able to provide insights into niche sectors which are not usually covered by other parties. We are also able to undertake ad hoc company and industry research reports.

Thematic (Sector/Industry)

Compulsion for Financial Inclusion in IndiaIn India, the GINI coefficient in rural areas rose to 0.28 in 2011-12 from 0.26 in 2004-05 and rose during the same period to an all-time high of 0.37 from 0.35 in urban areas. This puts India at the bottom of the table in Asia, just above Papua New Guinea and China. The household debt-GDP ratio of 8.9% is among the lowest in the region, contrasted with China (36.8%) and Thailand (83%). The absence of inclusion is especially revealing in rural areas…

Compulsion for Financial Inclusion in IndiaIn India, the GINI coefficient in rural areas rose to 0.28 in 2011-12 from 0.26 in 2004-05 and rose during the same period to an all-time high of 0.37 from 0.35 in urban areas. This puts India at the bottom of the table in Asia, just above Papua New Guinea and China. The household debt-GDP ratio of 8.9% is among the lowest in the region, contrasted with China (36.8%) and Thailand (83%). The absence of inclusion is especially revealing in rural areas…

Payment Banks Emerge as Financial Inclusion Becomes Need of the Hour in India

Head of Research at Fusion Wealth Management Ltd

Michael McGaughy

In my research and investing I stress three things: people, structure, and value.  I look for companies that are controlled and managed by quality people, have corporate structures that align minority and majority shareholder interests and trade at valuations that are below fair value if not outright cheap. This note is actually not about any of that and instead just a quick one about bitcoin and how my initial skepticism may have been wrong.  I usually don’t write “macro” or ‘thought pieces’…

In my research and investing I stress three things: people, structure, and value.  I look for companies that are controlled and managed by quality people, have corporate structures that align minority and majority shareholder interests and trade at valuations that are below fair value if not outright cheap. This note is actually not about any of that and instead just a quick one about bitcoin and how my initial skepticism may have been wrong.  I usually don’t write “macro” or ‘thought pieces’…

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

State Bank of India provides a wide range of banking and financial services to corporate, institutional, commercial, agricultural, industrial and individual customers throughout India.  The Bank also provides international banking to its Indian customers and has operations in other countries.

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State Bank Of India (SBIN IN)

SBI – Huge 4QFY2017 Losses, Dark Days Ahead

State Bank of India (SBI), the nation’s largest and the government’s premier bank, reported a consolidated 4Q loss of Rs30bn and an annual profit...

Hemindra Hazari

Payment Banks Emerge as Financial Inclusion Becomes Need of the Hour in India

Compulsion for Financial Inclusion in IndiaIn India, the GINI coefficient in rural areas rose to 0.28 in 2011-12 from 0.26 in 2004-05 and rose...

Speeda Research

Bitcoin - The View From Lagos

In my research and investing I stress three things: people, structure, and value. I look for companies that are controlled and managed by quality...

Michael McGaughy

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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