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Banking Fortnightly

Jamnadas Khushaldas Shares & Stock Broker Pvt Ltd. Banking Fortnightly. 8 th June 2009. Analyst:. Jaiprakash Toshniwal Phone: 022- 30284757 Email: jaiprakash.toshniwal@uljk.in.

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Banking Fortnightly

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  1. Jamnadas Khushaldas Shares & Stock Broker Pvt Ltd Banking Fortnightly 8th June 2009 Analyst: Jaiprakash Toshniwal Phone: 022- 30284757 Email: jaiprakash.toshniwal@uljk.in Jamnadas Khushaldas Shares & Stock Broker Pvt Ltd(NSE) ULJK Securities Pvt. Ltd.(BSE) ULJK Commodities Pvt. Ltd.(MCX) Jamnadas Khushaldas Shares & Stock Broker Pvt Ltd ULJK Securities Pvt Ltd Institutional Research

  2. Key Highlights for the fortnight ended 22nd May 2009 : • The bank credit in the system continues its southward movement during the fortnight. The credit growth in the system stands at 15.3%, sharply down from 17.2% reported during the previous fortnight. • In the absolute terms, the non food credit has come down by approx Rs.185bn and food credit increased by approx Rs.22.6bn during the fortnight. • Deposit growth in the system continues to remain healthy at 22.6% compared to 22.7% reported during the previous fortnight. • As the deposit growth outpace the credit growth, the CD ratio continues to decline. The CD ratio In the industry stands at 68.95%. The reduction in CD ratio is also attributable to the banks apprehension towards the lending. • Growth in the money supply in the system remains fairly strong at Rs.49.3tn, a growth of 20.9%. • As on 5th May 2009, Liquidity in the system remains at very high level at Rs.1046bn. Because of which no rate cut from RBI can be expected even if the inflation continues to be in the down trend. • As on 29th May 2009, the forex reserve of the country stands at $262.3bn. Trust & Commitment Jamnadas Khushaldas Shares & Stock Broker Pvt Ltd ULJK Securities Pvt Ltd Institutional Research

  3. Important News Round Up • ICICI Bank slashed its lending rates by 50 basis points, thereby reducing mortgage costs for its existing home loan borrowers. ( june 04, Source : The Telegraph) • Kingfisher gets Rs 2,000 crore funding from State Bank of India and a consortium of other banks to meet working capital requirements. Rs 950 crore was given by State Bank of India, the rest of the amount was arranged from Bank of India, Bank of Baroda and Punjab National Bank.. ( June 05, Source : Hindu Business line) • The MCX Stock Exchange (MCX-SX) has divested 6.48% stake to Union Bank of India and Bank of India for Rs 87.5 crore. The banks have picked up shares through a primary offering at Rs 10 per share (of face value Re.1). ( June 04, Source :Vccircle) • Bank of Baroda, Indian Overseas Bank and Andhra Bank will set up a joint subsidiary in Malaysia (June 04, Source : Headlines today) • State Bank of India, the nations biggest, could raise up to 280 billion rupees ($5.95 billion) selling bonds to boost capital and fund growth. (June 03, Bloomberg) • Axis Bank Ltd. approved a proposal to raise 30 billion rupees by selling bonds. (June 01, Bloomberg) Trust & Commitment Jamnadas Khushaldas Shares & Stock Broker Pvt Ltd ULJK Securities Pvt Ltd Institutional Research

  4. Contd….. • Union Bank of India (UBI) aims to step up its participation in syndicated loan market, targeting a volume of Rs 25,000-crore in FY 10, a six-fold increase from the current year. (June 4, Business Line) • Moody’s Investors Service has placed the ratings of 13 Indian banks, including the State Bank of India, under review for possible downgrade. The list includes Bank of Baroda, ICICI Bank, Canara Bank, Bank of India, Axis Bank, HDFC Bank, IDBI Bank, Union Bank of India, Punjab National Bank, Central Bank of India, Syndicate Bank and Oriental Bank of Commerce. (May 29, The Telegraph). • CRISIL has downgraded its ratings on ING Vysya Bank Ltd’s (ING Vysya’s) long-term bonds to ‘AA/AA-’ from ‘AA+/AA’, while removing the ratings from ‘Rating Watch with Negative Implications’. The rating on the fixed deposit programme too has been removed from the watch; the rating has been reaffirmed. The outlook on the long-term debt and the fixed deposit programme is now ‘Negative’. CRISIL has also reaffirmed its rating on the bank’s certificates of deposit programme at ‘P1+’. (May 27, Crisil) Trust & Commitment Jamnadas Khushaldas Shares & Stock Broker Pvt Ltd ULJK Securities Pvt Ltd Institutional Research

  5. Bank Credit Non Food Credit (Source : RBI) • Comments: • As on 22nd May 2009, the bank credit has shown a growth of 15.3% compared to 17.8% reported in the previous fortnight. In absolute terms , the bank credit decreased by approx by Rs.163n during the fortnight. • Non food credit growth during the fortnight stood at 15.9% compared to 17.4% during the previous fortnight. • In the absolute terms ,the non food credit decreased by Rs.185.7bn while food credit increased by Rs.22.65bn during the fortnight. Trust & Commitment Jamnadas Khushaldas Shares & Stock Broker Pvt Ltd ULJK Securities Pvt Ltd Institutional Research

  6. Deposits Demand Deposits as % of Total Deposits (Source : RBI) • Comments: • Deposit growth in the system remained at 22.64% for the fortnight ended 22nd May, 2009. In absolute terms deposit increased by Rs.157.31bn during the fortnight. • Demand Deposit / Total Deposit in the system has shown some improvement and stands at 12.9%. • Deposit growth continues to outpace the credit growth in the system reflecting the banks attitude towards lending. Trust & Commitment Jamnadas Khushaldas Shares & Stock Broker Pvt Ltd ULJK Securities Pvt Ltd Institutional Research

  7. Incremental CD ratio CD ratio (Source : RBI) • Comments: • CD ratio in the system continues to be in downtrend. At 68.95% for the fortnight, it is 68bps down from the previous fortnight. High increase in the deposit compared to negative lending is reflecting in the lower CD ratio. • Incremental CD ratio in the system stands at 49.7% compared to 55.4% reported in the previous fortnight. Trust & Commitment Jamnadas Khushaldas Shares & Stock Broker Pvt Ltd ULJK Securities Pvt Ltd Institutional Research

  8. SLR as % of NDTL Cash as % of Deposit (Source : RBI) • Comments: • SLR as % of NDTL stands at 31.7% compared to 32.10% reported during the previous fortnight. • Cash as a % of deposit stands at 6.06% compared to 5.55% reported during the previous fortnight. Trust & Commitment Jamnadas Khushaldas Shares & Stock Broker Pvt Ltd ULJK Securities Pvt Ltd Institutional Research

  9. Money supply Reverse Repo Outstanding (Rs. bn) (Source : RBI) • Comments: • During the fortnight ended 22nd May 2009, the money supply stands at Rs.49.3tn, a growth of 20.9%. • Liquidity in the system remains at fairly comfortable level. The reverse repo outstanding stands at Rs.1046.8bn Trust & Commitment Jamnadas Khushaldas Shares & Stock Broker Pvt Ltd ULJK Securities Pvt Ltd Institutional Research

  10. Spread between Govt sec and corporate Bond Yield Movement of Govt Paper (Source : Bloomberg) • Comments: • The 10 Yr (2019) Govt bond yield stands at 6.54% as on 5th June, 2009. The yield has sharply come down from the early April when it has risen to 7.02% (6th April 2009). • Spread between 10 yr corporate bond and Govt bond stands at 2.05% , inching from the low of 1.34% achieved on April 22, 2009. Trust & Commitment Jamnadas Khushaldas Shares & Stock Broker Pvt Ltd ULJK Securities Pvt Ltd Institutional Research

  11. Consumer Price Index 3 Months CD rates (Source : Bloomberg) • Comments: • 3 months CD rates stands at 3.33% on back of the high liquidity in the system. This will also reduce the cost of deposits of the banks. • Inflation for the week ended 14th May stands at 0.48%. CPI stands at 8.7% for the month ended 30th April, 2009. Trust & Commitment Jamnadas Khushaldas Shares & Stock Broker Pvt Ltd ULJK Securities Pvt Ltd Institutional Research

  12. Auction Of Government Securities (Source : RBI) Trust & Commitment Jamnadas Khushaldas Shares & Stock Broker Pvt Ltd ULJK Securities Pvt Ltd Institutional Research

  13. Thank You DISCLAIMER This report has been prepared by the research department of ULJK Securities Pvt Ltd. and is for information purposes only. This report is not construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. It is for the general information of clients of ULJK Securities Pvt Ltd. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. This report is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form. The report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon. ULJK Securities or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. ULJK Securities or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations. ULJK securities and/or its affiliates and/or employees may have interests/ positions, financial or otherwise in the securities mentioned in this report. Opinions expressed are our current opinions as of the date appearing on this material only. While we endeavor to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice. The analyst for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject company or companies and its or their securities, and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report. Trust & Commitment Jamnadas Khushaldas Shares & Stock Broker Pvt Ltd ULJK Securities Pvt Ltd Institutional Research

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