23.01.2024: Today’s Banking / Financial News at a Glance
🍒 Tamilnad Mercantile Bank recommends names of individuals for MD&CEO post to RBI : Private sector Tamilnad Mercantile Bank has recommended the names of three individuals for the post of Managing Director and CEO to the Reserve Bank of India, a top official said on Monday. The Tuticorin-based bank said it has developed a mechanism towards ensuring big fund transactions take place after getting an approval from a concerned officer. The development follows the transfer of funds to the tune of Rs 9,000 crore to the savings account of a cab driver in 2023, which was due to a ‘technical glitch’. “the names of three individuals have been recommended to the Reserve Bank of India and it is currently under the RBI (seeking its approval)”, the bank’s Managing Director and CEO S Krishnan told reporters on the appointment of a new MD and CEO. – economic times
🍒 Axis Bank Q3 net interest income may grow near 10%, margin contraction to limit net profit : Axis Bank’s Q3FY24 year-on-year growth in net interest income is likely to slow down, but is still expected register at close to 10 percent, driven by strong credit offtake. A contraction in margins is likely to limit the net profit growth further to mid-single digits, according to analyst estimates. The private sector lender will announce its fiscal third quarter results on January 23, 2024. According to an average estimate of five brokerages, Axis Bank is likely to report October-December NII at Rs 12,555 crore, up 9.5 percent from previous year. Net profit is expected to be at Rs 6,114 crore in Q3FY24, up 4.4 percent on-year. Higher cost of funds or borrowing costs will weigh on the lender’s margins during the quarter. Axis Bank’s net interest margins (NIMs) is estimated to contract by 16 basis points (bps) to 4.1 percent in Q3FY24, from 4.26 percent in Q3FY23. – moneycontrol.
🍒 KVB records a 43 per cent jump in Q3 net profit aided by lower provisions : Karur Vysya Bank has reported a double-digit growth in net profit for the third quarter of this fiscal, amid a marginal decline in operating profit, mainly due to higher operating expenses. The December 2023 quarter saw the Bank’s balance sheet cross ₹1 lakh crore. The old private sector bank has reported a 43 per cent increase in its net profit at ₹412 crore for the quarter ended December 31, 2023, when compared with ₹289 crore in the year-ago quarter, supported by lower provisions. The bank’s operating profit came down marginally (by twoper cent) to ₹676 crore when compared with ₹689 crore, an increase of 36 per cent. – Business Line.
🍒 Kotak Mahindra Bank’s challenge achieving scale for relevance not just size, says CEO Ashok Vaswani : Kotak Mahindra Bank’s biggest challenge would be achieving scale for relevance and not just for size, managing director and chief executive officer Ashok Vaswani said in his first public comments after the appointment. “As I see it, the challenge of the story, from here on is how we scale,” Vaswani said during post-earnings call of the bank on January 20, adding scaling shouldn’t be just for the sake of size but relevance. Kotak Mahindra Bank reported a net profit of Rs 3,005 crore for the December quarter, growing 7.6 percent from the previous year but falling short of analyst expectations of Rs 3,243 crore. Vaswani said Kotak is a very strong brand, which is well capitalised and has a platform offering array of financial services, products and services.- moneycontrol.
🍒 Banks to go in for big ATM push in the next 12-18 months : Banks are likely to see a big ATM refresh-cum-addition cycle in the next 12-18 months, involving replacement of about 40,000 ageing ATMs, and expansion of network by about 10,000, per industry estimates. All scheduled banks collectively added 4,452 ATMs (automated teller machines) in FY23, with their network standing at 2,19,513 as at March-end 2023, per RBI data. White label ATM operators expanded their ATM network by 4,292 ATM’s in FY23 to 35,791 as ofMarch-end 2023. “There will be a lot of churns in the ATM estate because many machines are ageing. They have to be refreshed. There are lot of regulations around ATM hardware and software now. So, it is making the banks change the old ATMs quickly,” Manjunath Rao, President – Managed Services, CMS Infosystems, said. – Business Line.
🍒 Hubergroup India in talks with banks, NBFCs, AIFs for Rs 1,500 cr debt : Hubergroup India, a global printing inks and chemicals specialist, is in discussions with various lenders, including ICICI Bank, Axis Bank, HDFC Bank, Tata Capital, Axis Finance, and ICICI Prudential Credit Fund, to borrow Rs 1,500 crore in working capital, amortizing funds, and bullet loans at costs ranging from 9% to 14%. Part of the funds will be used to buy out businesses from its German parent.”Hubergroup India, one of the largest in manufacturing globally, is borrowing money to buy out many businesses from the German parent, so that the Indian entity will become the flagship entity for the group,” a source said. – economic times
🍒 Soaring credit card dues a new source of concern for RBI : Credit cards segment is seeing the sharpest increase among all the categories of retail loans and that much of it flowing to the subprime segment could make the regulator worry as the unsecured personal loans did in the recent past. Even after the Reserve Bank of India imposed higher risk weights on unsecured lending by banks in mid-November 2023, credit card outstanding is the fastest growing segment at 34 percent on-year as of end November. The outstanding dues were at Rs 2.4 lakh crore, which is 5 percent of retail loans. A bulk of it is flowing to the economically less well off with average ticket size of Rs. 40,000 for the subprime segment and about Rs. 60,000 for near prime, an analysis of borrower data upto March 2023 indicated. .- economic times
🍒 Lockton enters the Indian market; Sandeep Dadia appointed country CEO : US-headquartered privately owned insurance brokerage Lockton has announced its entry into the Indian market with the appointment of Sandeep Dadia as its chief executive for the country and a member of the Lockton Asia leadership team. He will play a key role in driving Lockton’s growth and building a risk solutions strategy for clients, with a focus on attracting top talent, in India. His mission is to elevate Lockton’s status to one of the leading international brokers in India by harnessing the company’s global expertise and local knowledge while maintaining its 97% client retention rate. – economic times.
🍒 Credit cards, home loan quality deteriorates : Overall portfolio at risk (PAR) for consumer loans in the 31-180 day bucket improved to 3.5 per cent in September 2023 from 4.7 per cent in March 2023. However, PAR for home loans deteriorated to 2.6 per cent from 2.4 per cent, and for credit cards to 8.8 per cent from 8.4 per cent. PAR for personal loans worsened slightly to 2.4 per cent from 2.5 per cent. As such, origination or sanction quality showed much faster deterioration in early delinquencies, reflected in the increase in 30+ day delinquencies for three-month old loans with a ticket size of up to ₹50,000. – Business Line
🍒 PSU NBFCs have better asset quality than private sector peers : Mumbai Asset quality of state-owned NBFCs was much better than their private sector peers, with gross NPA ratio at 2.5 per cent compared with a much higher 6.1 per cent for private sector NBFCs in H1 FY24. Further, the asset quality of private NBFCs’ industrial advances remained high at 12.5 per cent, constituting 21.6 per cent of overall gross NPAs for the NBFC sector, as per a report by CARE Ratings. “Among major sectors, the personal loans segment, which had grown rapidly in the last few years, continues to have the lowest GNPA ratio in September 2023 at 3.6 per cent,” the report said, adding that a shift in the segmental distribution of credit can be seen with a tilt towards retail. – Business Line.
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