Daily Brief Financials: HDFC Bank, Bank Negara Indonesia Persero, EML Payments Limited, Korea Stock Exchange KOSPI 200 and more

• Post merger, HDFC Bank (“HDFCB”) has been under pressure in regards to sustaining its loan growth, which very much hinges on rapid deposit growth.
• While the deposit growth has been weak, it has been an industry-wide issue. Furthermore, at times, the period-end numbers can be misleading.
• Focusing on average numbers paints a better picture of growth. Looking at the averages, deposit growth has been strong at 4.6% QoQ, despite liquidity issues in the banking system.

• Negara value attributes, its growth potential captured by its low PEG ratio and its improving efficiency ratio all stand out; pre- and post-provision returns edged higher, with high NPL coverage
• We are also positive on Mandiri for its quality attributes, its premium returns, and its strong credit quality metrics; Mandiri has the second-best efficiency ratio after mega-cap Bank Central Asia
• Bank Mega has seen credit quality stabilise in 2Q24, but its returns are under pressure, with the efficiency ratio worsening steadily; cost of risk is likely to increase going forward

EML Payments’ FY24 results were the first to show the full impact of the liquidation of PFS Card Services Ireland Limited (PCSIL). Continuing operations, which exclude PCSIL, saw gross debit volume (GDV) growth of 18%, revenue growth of 18% and underlying EBITDA growth of 34%. The sale of Sentenial has since completed with proceeds of A$53.4m, moving EML to a net cash position. Management is now focused on moving back to a growth mindset in the remaining business and optimising the cost base post the disposals. Shifting away from the medium-term targets given in February, management expects to disclose more at its AGM in November. We have reduced our FY25 forecasts to reflect the more modest EBITDA guidance and to remove the Sentenial business.

• The KOSPI 200 has corrected for 3 weeks in a row, reaching a low at 340.08 last week. It is WEEKLY OVERSOLD, according to our models.
• In a previous insight we theorized the index could go higher (but only for 1 week), however the rally never materialized. From there it went downhill, now it can bounce.
• The support area between the last Close and 320 offers strong support, according to our WEEKLY pattern models.