FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com


Join the forum, it's quick and easy

FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com
FINANCIAL CHRONICLE™
Would you like to react to this message? Create an account in a few clicks or log in to continue.
FINANCIAL CHRONICLE™

Encyclopedia of Latest news, reviews, discussions and analysis of stock market and investment opportunities in Sri Lanka

Click Link to get instant AI answers to all business queries.
Click Link to find latest Economic Outlook of Sri Lanka
Click Link to view latest Research and Analysis of the key Sectors and Industries of Sri Lanka
Worried about Paying Taxes? Click Link to find answers to all your Tax related matters
Do you have a legal issues? Find instant answers to all Sri Lanka Legal queries. Click Link
Latest images

Latest topics

» Plantation Companies
by bkasun Yesterday at 1:08 pm

» COCR - silence of the COCR
by Hawk Eye Fri Dec 06, 2024 10:44 pm

» COCR IN TROUBLE?
by Equity Win Fri Dec 06, 2024 11:22 am

» Banking Sector (3Q 2024)
by SL-INVESTOR Tue Dec 03, 2024 10:09 pm

» PALM Stock Update: Ready to Break Out!
by Anura-K Fri Nov 29, 2024 5:40 pm

» Renewable Energy Companies (1H 2024)
by God Father Thu Nov 28, 2024 8:56 pm

» Crypto , Digital Currency Trading , Forex
by KavinduTM Thu Nov 28, 2024 5:52 pm

» Browns Investments PLC (BIL): Net Loss masked by One-off gains from Acquisitions
by mafasmunaseer Fri Nov 22, 2024 1:56 am

» Hotel Sigiriya (HSIG) most undervalued & huge profit making Hotel
by Chalitha Tharanga Tue Nov 19, 2024 6:44 pm

» Mahaweli Reach Hotels (MRH.N)
by Chalitha Tharanga Tue Nov 19, 2024 6:41 pm

» CSE to turn bullish after November 14 poll
by Rare Tue Nov 19, 2024 10:13 am

» ලාභ විජ්ජාව!!
by D.G.Dayaratne Mon Nov 18, 2024 8:11 pm

» ‘Buy the Rumour, Sell the News’
by God Father Sat Nov 16, 2024 12:00 pm

» Asian stocks drift higher amid rate cut speculation; Japan lags
by Rare Sat Nov 16, 2024 9:56 am

» Oil prices fall further
by Rare Sat Nov 16, 2024 9:40 am

» Post-election winners.
by Rare Sat Nov 16, 2024 9:36 am

» Bullish about a sustainable turnaround - CSE Chairman
by Rare Sat Nov 16, 2024 9:25 am

» COMMERCIAL BANK OF CEYLON PLC (COMB.N0000)
by EPS Thu Nov 14, 2024 10:31 pm

» People's leasing VS Singer Finance IPO Analysis
by ddrperera Wed Nov 13, 2024 8:18 pm

» Insights into LOLC Advanced Technologies
by samaritan Wed Nov 13, 2024 10:41 am

» LOLC Tech's ambitious plans for global expansion
by samaritan Tue Nov 12, 2024 2:06 pm

» PLANTATION SECTOR
by God Father Sun Nov 10, 2024 8:19 pm

» People's leasing company, a hidden gem? (an analysis)
by Nandana Withanage Sun Nov 10, 2024 6:56 pm

LISTED COMPANIES

Submit Post
ශ්‍රී ලංකා මූල්‍ය වංශකථාව - සිංහල
Submit Post


CONATCT US


Send your suggestions and comments

* - required fields

Read FINANCIAL CHRONICLE™ Disclaimer



EXPERT CHRONICLE™

ECONOMIC CHRONICLE

GROSS DOMESTIC PRODUCT (GDP)



CHRONICLE™ YouTube


You are not connected. Please login or register

BANKING SECTOR

+101
sakuni
buddikasmart
Investinginsl
madukp
Eranx
Wonderer
C.THARANGA
vijay singh
ONTHEMONEY
Tiger_Wolf
suku502
100Bill
atdeane
IDK
KILLER99
Harry82
Wolf86
invest thinker
Jana
Eranga87
Ramesh tharaka bulto
Aweej
Kipling
subash81
කොටස් වෙළඳපොළ2020
High-flyer
geesura
MaJa
Winner123
Anushka chathuranga
Kanishka_2020
Mr. X
DamithAsian
ADVENTUS
shan31
judecroos
SANJAYANM
Vishwanarth
CPGOMEZ71
celtic tiger
ronstyn53
dayandacool
Love Boy
shihan 93
target1
Equityinvestor
EquityPlus
AsithaDe
Srilankan Psyco
wealth123
fireshelter
ResearchMan
Eng Krishantha
st clair's
NZ BOY
Yoho
abey
sureshot
CITIZEN
NANDANA2012
jaya
engineer
Promoney
ColomboCSE
Kaish86
Cricketman
kasun_gimhana
KavinduTM
Teller
PDH
Mr-Star
ThilinaM
TuTanKaman
soileconomy
Yahapalanaya
samaritan
ruwan326
peacockman
anges
Sstar
Joe007
capitallinkceylon
troy
Nuwan Prasad
dumifer
Rookantha Rajapakse
smallville
Soundchips
Gaja
ShareShares
worthiness
Aamiable
StocksWatch
Slstock
stockanalytic
UKboy
Rocky
tubal
milanka
RockStock
seyon
105 posters

Go to page : 1, 2, 3 ... 10, 11, 12  Next

Go down  Message [Page 1 of 12]

1BANKING SECTOR Empty BANKING SECTOR Sat Apr 16, 2011 6:33 pm

seyon


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

The banking sector in Sri Lanka, which comprises Licensed Commercial Banks (LCBs) and Licenced Specialised banks (LSBs), dominates the financial system and accounts for the highest share of the total assets in the financial system. Banks play a critical role within the Sri Lankan financial system, as they are engaged in provision of liquidity to the entire economy, while transforming the risk characteristics of assets.

Banks also engaged in providing payment services, thereby facilitating all entities to carry out their financial transactions. On the other hand, banks can create vulnerabilities of systemic nature, partly due to a mismatch in maturity of assets and liabilities and their interconnectedness. Therefore, the soundness of banks is important, as it contributes towards maintaining confidence in the financial system, and any failure may have the potential to impact on activities of all other financial and non-financial entities, and finally the economy.

In terms of the asset base and the magnitude of services provided, the LCBs are the single most important category of financial institutions within the banking sector. LCBs dominate the financial system with the highest market share of the entire financial system's assets. Therefore, the health of Sri Lankan financial system depends to a large extent on the soundness of the LCBs, primarily on the performance and financial strength of the six largest LCBs, generally referred to as the Systemically Important Banks (SIBs).

The systemic importance of the LSB sector is relatively low in comparison to the LCBs, both in terms of size and their impact on the financial system, as it does not play a major intermediary role in the payment cycle.

Hi Friends

This brief analysis is connected to my previous analysis (https://forum.srilankaequity.com/t2231-banking-sector-analysis-combhnbseybntbsambdfcchdfcndbpapc-and-mbsl) and this analysis in briefing the financials comparing with previous year and including main features (key balances and numbers) of the retail largest banks. I excluded the DFCC,NDB and HDFC , as their scope is mainly focus on development banking. Further I give certain measures ( KPI- Key Performance Indicators) to interpret  the performance. I do not restrict with these KPI, if u have additional measures related to banking industry, Pls share with us..

This is good time to discuss about banking sectors, as expected to see the first quarter results with the new improvement due to tax saving and economic growth. Here we have veteran analyzers with different views, which would help us to have good investment decision and to sharing our knowledge and views.  

Following are the my selected KPIs  
* Interest Margin
* % of Other Income Out of Operating Profit Operational Cost to Income Ratio
* % Loan Loss Provision out of Total Non Performing Loan
* NPL Raito
* PER
* PBV
* Number of Employees (comment in terms of total assets)


This is My View……………….

When I do the analysis of banks (SEYB,NTB,SAMP,PABC) KPIs ,I took the indicators of COMB and HNB as industry norms ( I may be wrong) as these two banks are relatively strength in the banking industry and analyzed COMB and HNB by comparing each others.    

1.SEYB…

Interest Margin – Line with industry

% of Other Income Out of Operating Profit- Very High, out of that 1Bn bad debt written back and recovered  

Operational Cost to Income Ratio – Very high % comparing with other banks

% Loan Loss Provision out of Total Non Performing Loan – Comparably High  

NPL Raito  - Highest Ratio in the Banking Sectors ( this might be improved due to the recent restructured program taken place in the bank and Bank strategic target to reduce to 10% during the year.)  

PER  - Trading @ 15X which is slightly low comparing  with other retails banks. This impact is due to the recent Rights issue  

PBV- Very Low… This also may be due to the recent Rights issue  

Number of Employees – Very High

2.NTB

Interest Margin – Line with industry

% of Other Income Out of Operating Profit- Very High, out of that 1.3Bn  reported as fees and other income ( no details given) this may
be due to the unrealized gain on fair value adjustment.  

Operational Cost to Income Ratio – Very high % amongst other banks

% Loan Loss Provision out of Total Non Performing Loan – Comparably High, However comparing with previous year good improvement.  

NPL Raito – Good, line with industry…  

PER - Trading @ 18x,  Fairly trading @ Industry average

PBV  - Line with Industry

Number of Employees - Comparably high

3.SAMP

Interest Margin – Line with industry

% of Other Income Out of Operating Profit- Slightly High, out of that Capital Gain on Sale of LBFL shares 654Mn , Bad Debt Recoveries
1.2Bn and Recovery of Impairment of Investment 1.3Bn. Hence Recovery of impairment and Capital gain are non recurring items amounts to Rs.2Bn.    

Operational Cost to Income Ratio – Par with industry
% Loan Loss Provision out of Total Non Performing Loan – Very High reporting @ 12%  due to the bank made additional specific credit
loss provisions of Rs. 1,344.9 Mn, over and above the amounts recommended by the Central Bank of Sri Lanka ignoring collateral values.  

NPL Raito – Good, and Well managed

PER - Trading @ 14x, is Low comparing with other bank, However, taking out the non recurring income Rs.1.3Bn, then PE would be trading above the average.  

PBV  - Line with Industry

Number of Employees – Fairly ok. We could see there were new recruitment about  300 staff due to addition of 30 new branches during the year.  

4.PABC

Interest Margin – Slightly high margin with other banks  

% of Other Income Out of Operating Profit- Fairly Good  

Operational Cost to Income Ratio – Par with industry

% Loan Loss Provision out of Total Non Performing Loan – Improved comparing with previous year.  Par with the industry  

NPL Raito – Above the industry average, however it is improved comparing with previous year.

PER - Trading @ 21x, is high comparing with other bank.

PBV  - Line with Industry

Number of Employees –  Comparably High..

5.HNB

Interest Margin – Par with industry

% of Other Income Out of Operating Profit-  Comparing with COMB contribution is high, that is due to the capital gain of sales quoted investment amounts 600Mn

Operational Cost to Income Ratio – Reporting @76% comparing with COMB, ratio is high

% Loan Loss Provision out of Total Non Performing Loan – Well Maintained at very low level  

NPL Raito – Reporting at 5% , Very lower level

PER - Trading @ 20x, is high comparing with other bank.

PBV  - Line with Industry

Number of Employees – Little bit high compare to COMB employees with the total assets.
 

6.COMB

Interest Margin – Par with industry

% of Other Income Out of Operating Profit- Reporting at 33%, Lowest contribution to operational profit.  

Operational Cost to Income Ratio – Reporting @ 61% very lowest amongst the banks.

% Loan Loss Provision out of Total Non Performing Loan – Well Maintained at very low level  

NPL Raito – Reporting at 7% , a little bit higher compare to HNB

PER - Trading @ 19x

PBV  - Line with Industry

Ok, there can be some differ view on the interpretation and comparison of KPI or additional measures to be brought to have good analysis.

So Pls share ur thoughts and views on the KPI or If u have some additional / different measures to be adopted… Pls contribute that with the analysis

Thanks in advance

Find the attachment of Brief Analysis of Banking Sector
Attachments
BANKING SECTOR AttachmentA Brief Analysis of Banking Sector...........xlsx
A Brief Analysis of Banking Sector..........
You don't have permission to download attachments.
(30 Kb) Downloaded 58 times



Last edited by seyon on Sat Apr 16, 2011 7:45 pm; edited 2 times in total

deza likes this post

2BANKING SECTOR Empty Re: BANKING SECTOR Sat Apr 16, 2011 6:39 pm

RockStock


Manager - Equity Analytics
Manager - Equity Analytics

thanks for the great work

3BANKING SECTOR Empty Re: BANKING SECTOR Sat Apr 16, 2011 6:49 pm

milanka

milanka
Vice President - Equity Analytics
Vice President - Equity Analytics

Seyon: there are few other KPI's discussed in this research report. One of them is CASA - Current A/c to Savings accounts ratio. You may add relevent KPI's to your report. Thanks for the Analysis anyway.

http://www.ft.lk/2011/04/11/licensed-commercial-banking-sector-riding-the-growth-wave/

http://forum.srilankaequity.com/u188

4BANKING SECTOR Empty Re: BANKING SECTOR Sat Apr 16, 2011 6:55 pm

tubal


Vice President - Equity Analytics
Vice President - Equity Analytics

I do appreciate Seyon's hard work. Well done.
buf if you ask me (and no one is asking me :-) ), unimaginative brokers are promoting the banking sector and most investors are falling hook line and sinker for it. When the interims start coming out, we will find that once you deduct the extra-ordinary items, eps growth is very ordinary.

You will also find that the central banks increase in the reserve ratio will have a negative impact on the banks bottom line.

5BANKING SECTOR Empty Re: BANKING SECTOR Sat Apr 16, 2011 7:57 pm

Rocky

Rocky
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

tubal wrote:I do appreciate Seyon's hard work. Well done.
buf if you ask me (and no one is asking me :-) ), unimaginative brokers are promoting the banking sector and most investors are falling hook line and sinker for it. When the interims start coming out, we will find that once you deduct the extra-ordinary items, eps growth is very ordinary.

You will also find that the central banks increase in the reserve ratio will have a negative impact on the banks bottom line.

Agree with tubal to some extent. Banking sectors has seen better days.
In my opinion Sampath is the most secure investment though you will not lose with others mentioned above.

Prudency in showing higher provisions for bad debts is not a negative sign. Actually, to the contrary it gives an investor more confidence.

Profits will be marginal though. Cannot expect anything exceptional.

6BANKING SECTOR Empty Re: BANKING SECTOR Sat Apr 16, 2011 8:05 pm

seyon


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

tubal wrote: When the interims start coming out, we will find that once you deduct the extra-ordinary items, eps growth is very ordinary.

You will also find that the central banks increase in the reserve ratio will have a negative impact on the banks bottom line.

That is true I agreed tubal.. This we could see from SAMP out of 3.3Bn bottom line Rs.2bn reported by non recurring income. However COMB and HNB are very attractive in terms of bottom line... What do u say...


7BANKING SECTOR Empty Re: BANKING SECTOR Sat Apr 16, 2011 8:14 pm

seyon


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

hybrid_OS wrote:
tubal wrote:I do appreciate Seyon's hard work. Well done.
buf if you ask me (and no one is asking me :-) ), unimaginative brokers are promoting the banking sector and most investors are falling hook line and sinker for it. When the interims start coming out, we will find that once you deduct the extra-ordinary items, eps growth is very ordinary.

You will also find that the central banks increase in the reserve ratio will have a negative impact on the banks bottom line.

Agree with tubal to some extent. Banking sectors has seen better days.
In my opinion Sampath is the most secure investment though you will not lose with others mentioned above.

Prudency in showing higher provisions for bad debts is not a negative sign. Actually, to the contrary it gives an investor more confidence.

Profits will be marginal though. Cannot expect anything exceptional.

Hi hybrid

For the SAMB don"t u think the opening of 30 branches during the year of 2010 will impact the cost income ratio negatively in coming quarters. Then this impact would hit the bottom line...

How do u look into this...


8BANKING SECTOR Empty Re: BANKING SECTOR Sat Apr 16, 2011 10:51 pm

UKboy

UKboy
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

Great work seyon,
Eventhough NTB produced one billion rupee profits in last year, cse.alpha ( slstock earlier) mentioned an interesting issue regarding NTB share capital which could easily be missed (by our retailors).

http://forum.srilankaequity.com/t2343-ntb-2011-warrants-converted-to-shares

9BANKING SECTOR Empty Re: BANKING SECTOR Sat Apr 16, 2011 11:38 pm

stockanalytic

stockanalytic
Manager - Equity Analytics
Manager - Equity Analytics

hi seyon, good work.
but I don't expect banking mega rally soon.
For a long time, we are expecting banking rally. If rally initiated by someone, their will be huge selling pressure within 5% capital gain. So, rally should break these selling orders. Therefore we need big hand investers to do this. Otherwise rally will rest for a while, and then it will start again (like BRWN)
Now our retailers are with illiquid shares. we need big fishes for banking rally. Banking shares are comparatively higher amount with CDs account and their capitalization also high. (CDs % of shares= COMB- 95.5% SAMP-88.9% NTB- 83.9% HNB- 82.6% NDB-80.9% DFCC- 97.7% MBSL- 99.4%) Big market capitalization with higher number of shares is very difficult to get price appreciation with current market condition (mainly depends on retailers). But, I am expecting near future rally (manipulated rally) with SEYB (they need rally to oversubscribe the Rights).

10BANKING SECTOR Empty Re: BANKING SECTOR Sun Apr 17, 2011 2:27 am

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics

seyon wrote:

2.NTB
Interest Margin – Line with industry


% of Other Income Out of Operating Profit- Very High, out of that 1.3Bn reported as fees and other income ( no details given) this may
be due to the unrealized gain on fair value adjustment.

Operational Cost to Income Ratio – Very high % amongst other banks
% Loan Loss Provision out of Total Non Performing Loan – Comparably High, However comparing with previous year good improvement.
NPL Raito – Good, line with industry…
PER - Trading @ 18x, Fairly trading @ Industry average
PBV - Line with Industry
Number of Employees - Comparably high

Seyon, good work.

Regarding NTB isn;t the current PE ( before warrants inclusion).

NTB PE = 77/5.4=14.25 not 18 .

11BANKING SECTOR Empty Re: BANKING SECTOR Sun Apr 17, 2011 2:58 am

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics

stockanalytic wrote:hi seyon, good work.
but I don't expect banking mega rally soon.
For a long time, we are expecting banking rally. If rally initiated by someone, their will be huge selling pressure within 5% capital gain. So, rally should break these selling orders. Therefore we need big hand investers to do this. Otherwise rally will rest for a while, and then it will start again (like BRWN)
Now our retailers are with illiquid shares. we need big fishes for banking rally. Banking shares are comparatively higher amount with CDs account and their capitalization also high. (CDs % of shares= COMB- 95.5% SAMP-88.9% NTB- 83.9% HNB- 82.6% NDB-80.9% DFCC- 97.7% MBSL- 99.4%) Big market capitalization with higher number of shares is very difficult to get price appreciation with current market condition (mainly depends on retailers). But, I am expecting near future rally (manipulated rally) with SEYB (they need rally to oversubscribe the Rights).

Regarding SEYB,

I am not sure on this ( please don;t quote me) , but am not sure whether SEYB hassupport some pre arrangement with institutional/HNW support to subscribe for their rights completely at their offered prices if the retailers fail. If by XR date if the SEYB price don;t not go up to make the right issue attractive that means there is no push. In turn it could mean what I said before. The way SEYB have acted with a 1 Rs Dividend then rights issue and then and delayed announcement of right issues dates it appears that way right now. If you look at OSEA and LITE, the right issues would have been failure as OSEA was trading at right price of 15 and LITE at 8. SO essentially the right issue would have been unsuccessfull in our eye. At least in the OSEA case I heard that their mother company bought all( most) remaining OSEA rights on a pre arragement. Am wondering the same for SEYB???

I really HOPE NOT, as a small investor as I already lost considerable money on SEYB due to this right issue. I hope they will protect their smaller time investors like myself and many. I know after talking to some on the forum they loss money on SEYB too right now. After this loss if they want even more money from me ( for rights) hmm...?


Note : To be unbiased, if n ot for this right issue mess to date, I believe SEYB to be a good long term bank with low PBV and decent earning with improving financials. It was attractive before the right issue. The right issue with influx of more capital should make the bank stringer for the future.

12BANKING SECTOR Empty Re: BANKING SECTOR Sun Apr 17, 2011 9:30 am

seyon


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

slstock wrote:

Seyon, good work.

Regarding NTB isn;t the current PE ( before warrants inclusion).

NTB PE = 77/5.4=14.25 not 18

Yes before the warrant conversion PE is correct, However, the resent drop in the share price due to the warrant conversion. that is the reason i added the warrants shares for my calculation. This good point to be noted that capital infusion from warrant conversion will boost the coming quarter earnings. Hence Forwarded PE would be 14 ( 2010 Annual EPS -4.8 ( Bank only) Expected Earning growth due to the conversion 15% ( 15% contribution to stated capital from warrant conversion), so forwarded annualized EPS only adjusted earning growth from new capital infusion from warrant, is 4.8* 115%) then forwarded PE would be trading at 14x)....

Am i correct Slstock...

13BANKING SECTOR Empty Re: BANKING SECTOR Sun Apr 17, 2011 9:40 am

seyon


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

slstock wrote:

Regarding SEYB,

I am not sure on this ( please don;t quote me) , but am not sure whether SEYB hassupport some pre arrangement with institutional/HNW support to subscribe for their rights completely at their offered prices if the retailers fail. If by XR date if the SEYB price don;t not go up to make the right issue attractive that means there is no push. In turn it could mean what I said before. The way SEYB have acted with a 1 Rs Dividend then rights issue and then and delayed announcement of right issues dates it appears that way right now. If you look at OSEA and LITE, the right issues would have been failure as OSEA was trading at right price of 15 and LITE at 8. SO essentially the right issue would have been unsuccessfull in our eye. At least in the OSEA case I heard that their mother company bought all( most) remaining OSEA rights on a pre arragement. Am wondering the same for SEYB???

I really HOPE NOT, as a small investor as I already lost considerable money on SEYB due to this right issue. I hope they will protect their smaller time investors like myself and many. I know after talking to some on the forum they loss money on SEYB too right now. After this loss if they want even more money from me ( for rights) hmm...?


Note : To be unbiased, if n ot for this right issue mess to date, I believe SEYB to be a good long term bank with low PBV and decent earning with improving financials. It was attractive before the right issue. The right issue with influx of more capital should make the bank stringer for the future.

Do u think after XR price even come down below the right issue price.. But I am little bit confident with the 1st quarter numbers there would be push up in the share price due to the bank performance. that may be the reason they delayed the right issue announcement.

14BANKING SECTOR Empty Re: BANKING SECTOR Sun Apr 17, 2011 10:09 am

StocksWatch


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

Thanks for your hard work seyon. This is really useful. + rep from me.

15BANKING SECTOR Empty Re: BANKING SECTOR Sun Apr 17, 2011 10:13 am

Aamiable


Vice President - Equity Analytics
Vice President - Equity Analytics

Thanks seyon rep from me.. Smile Very Happy Smile Very Happy

16BANKING SECTOR Empty Re: BANKING SECTOR Sun Apr 17, 2011 2:06 pm

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics

seyon wrote:
slstock wrote:

Seyon, good work.

Regarding NTB isn;t the current PE ( before warrants inclusion).

NTB PE = 77/5.4=14.25 not 18

Yes before the warrant conversion PE is correct, However, the resent drop in the share price due to the warrant conversion. that is the reason i added the warrants shares for my calculation. This good point to be noted that capital infusion from warrant conversion will boost the coming quarter earnings. Hence Forwarded PE would be 14 ( 2010 Annual EPS -4.8 ( Bank only) Expected Earning growth due to the conversion 15% ( 15% contribution to stated capital from warrant conversion), so forwarded annualized EPS only adjusted earning growth from new capital infusion from warrant, is 4.8* 115%) then forwarded PE would be trading at 14x)....

Am i correct Slstock...

Well we first need to go with Group Eps not Bank.

If we go with PE after warrants I get the below

PAT: 1084225000
new warrants= 20,963,943
Total Shares : 209,643,340+20,963,943=230607283
EPS:1084225000/230607283=4.70
PE: 77/4.7=16.38

Though the EPS got diluted due to warrants their Capital will grow further ( each share was converted at Rs 35). This infusion will be good for future as you identified due to good management. Unlike other warrant issues NTB warrants were a carefully though out process.

17BANKING SECTOR Empty Work Sheet for RCL, CERA, LWL, & TILE Sun Apr 17, 2011 2:15 pm

worthiness


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

Do you have the worksheet for the above.

Database on banking sector is so meaningful.
I believe it should be read in Billions...isn't it?

Thanks

18BANKING SECTOR Empty Re: BANKING SECTOR Sun Apr 17, 2011 2:22 pm

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics

seyon wrote:
slstock wrote:

Regarding SEYB,

I am not sure on this ( please don;t quote me) , but am not sure whether SEYB hassupport some pre arrangement with institutional/HNW support to subscribe for their rights completely at their offered prices if the retailers fail. If by XR date if the SEYB price don;t not go up to make the right issue attractive that means there is no push. In turn it could mean what I said before. The way SEYB have acted with a 1 Rs Dividend then rights issue and then and delayed announcement of right issues dates it appears that way right now. If you look at OSEA and LITE, the right issues would have been failure as OSEA was trading at right price of 15 and LITE at 8. SO essentially the right issue would have been unsuccessfull in our eye. At least in the OSEA case I heard that their mother company bought all( most) remaining OSEA rights on a pre arragement. Am wondering the same for SEYB???

I really HOPE NOT, as a small investor as I already lost considerable money on SEYB due to this right issue. I hope they will protect their smaller time investors like myself and many. I know after talking to some on the forum they loss money on SEYB too right now. After this loss if they want even more money from me ( for rights) hmm...?


Note : To be unbiased, if n ot for this right issue mess to date, I believe SEYB to be a good long term bank with low PBV and decent earning with improving financials. It was attractive before the right issue. The right issue with influx of more capital should make the bank stringer for the future.

Do u think after XR price even come down below the right issue price.. But I am little bit confident with the 1st quarter numbers there would be push up in the share price due to the bank performance. that may be the reason they delayed the right issue announcement.

It is unlikely after XR the price will again ( it already did) come down below XR price ( in SEYB.N case). Right now SEYB.N is just above Rights price. Though there is a good possiblity of a price hike before the XR ( I hope so also for my sake ) what I was pointing out was that I hope it will not be like the OSEA /LITE right issue where the share price was almost the same as right issue price where making it un attractrive for retailers to go for the rights.

Sadly for a bank with good growth financials this right issue was not the best timed for small investors like us.( at least until now) . Lets hope there will be a upward trend in view of the bank future growth. IF there is some overall financial rally this could go up with it anyway.

19BANKING SECTOR Empty Re: BANKING SECTOR Sun Apr 17, 2011 7:32 pm

seyon


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

slstock wrote:
seyon wrote:
slstock wrote:

Seyon, good work.

Regarding NTB isn;t the current PE ( before warrants inclusion).

NTB PE = 77/5.4=14.25 not 18

Yes before the warrant conversion PE is correct, However, the resent drop in the share price due to the warrant conversion. that is the reason i added the warrants shares for my calculation. This good point to be noted that capital infusion from warrant conversion will boost the coming quarter earnings. Hence Forwarded PE would be 14 ( 2010 Annual EPS -4.8 ( Bank only) Expected Earning growth due to the conversion 15% ( 15% contribution to stated capital from warrant conversion), so forwarded annualized EPS only adjusted earning growth from new capital infusion from warrant, is 4.8* 115%) then forwarded PE would be trading at 14x)....

Am i correct Slstock...

Well we first need to go with Group Eps not Bank.

If we go with PE after warrants I get the below

PAT: 1084225000
new warrants= 20,963,943
Total Shares : 209,643,340+20,963,943=230607283
EPS:1084225000/230607283=4.70
PE: 77/4.7=16.38

Though the EPS got diluted due to warrants their Capital will grow further ( each share was converted at Rs 35). This infusion will be good for future as you identified due to good management. Unlike other warrant issues NTB warrants were a carefully though out process.

Thanks Slstock... I took only the bank nos... Yes u are correct, group performance to be considered to analyze value...

Thanks again for pointing out...

Happy Trading

20BANKING SECTOR Empty Re: BANKING SECTOR Sun Apr 17, 2011 9:19 pm

tubal


Vice President - Equity Analytics
Vice President - Equity Analytics

seyon wrote:
tubal wrote: When the interims start coming out, we will find that once you deduct the extra-ordinary items, eps growth is very ordinary.

You will also find that the central banks increase in the reserve ratio will have a negative impact on the banks bottom line.

That is true I agreed tubal.. This we could see from SAMP out of 3.3Bn bottom line Rs.2bn reported by non recurring income. However COMB and HNB are very attractive in terms of bottom line... What do u say...



Not trying to knock down Seyon's work, but I think looking solely at the bottom line is a big mistake. As we have already discussed banks and indeed many companies in the CSE have artificially inflated bottomlines. Inflated due to mark to market adjustments or sales of their investments.

Usually whenever you find an artificially inflated bottom line you can find 25 press releases saying how wonderful that company is doing (yeah, you read the ones that LOLC, Browns et al sent out). They never mention capital gains or mark to market adjustments.

Sometimes you see companies that have dramatic declines in their bottom line from the previous year. They are often followed by 50 press releases that mention the previous year had extra ordinary items in P&L and when you deduct them, the company has actually seen 2.5% growth in profitability. You will see many of them in the coming weeks.


21BANKING SECTOR Empty Re: BANKING SECTOR Sun Apr 17, 2011 9:34 pm

seyon


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

tubal wrote:
seyon wrote:
tubal wrote: When the interims start coming out, we will find that once you deduct the extra-ordinary items, eps growth is very ordinary.

You will also find that the central banks increase in the reserve ratio will have a negative impact on the banks bottom line.

That is true I agreed tubal.. This we could see from SAMP out of 3.3Bn bottom line Rs.2bn reported by non recurring income. However COMB and HNB are very attractive in terms of bottom line... What do u say...



Not trying to knock down Seyon's work, but I think looking solely at the bottom line is a big mistake. As we have already discussed banks and indeed many companies in the CSE have artificially inflated bottomlines. Inflated due to mark to market adjustments or sales of their investments.

Usually whenever you find an artificially inflated bottom line you can find 25 press releases saying how wonderful that company is doing (yeah, you read the ones that LOLC, Browns et al sent out). They never mention capital gains or mark to market adjustments.

Sometimes you see companies that have dramatic declines in their bottom line from the previous year. They are often followed by 50 press releases that mention the previous year had extra ordinary items in P&L and when you deduct them, the company has actually seen 2.5% growth in profitability. You will see many of them in the coming weeks.



Yes.. "looking solely at the bottom line is a big mistake" that is very much true... I think ideal would be the operational profit to measure the performance... isn't it....

22BANKING SECTOR Empty Re: BANKING SECTOR Sun Apr 17, 2011 10:29 pm

Rocky

Rocky
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics

seyon wrote:
hybrid_OS wrote:
tubal wrote:I do appreciate Seyon's hard work. Well done.
buf if you ask me (and no one is asking me :-) ), unimaginative brokers are promoting the banking sector and most investors are falling hook line and sinker for it. When the interims start coming out, we will find that once you deduct the extra-ordinary items, eps growth is very ordinary.

You will also find that the central banks increase in the reserve ratio will have a negative impact on the banks bottom line.

Agree with tubal to some extent. Banking sectors has seen better days.
In my opinion Sampath is the most secure investment though you will not lose with others mentioned above.

Prudency in showing higher provisions for bad debts is not a negative sign. Actually, to the contrary it gives an investor more confidence.

Profits will be marginal though. Cannot expect anything exceptional.

Hi hybrid

For the SAMB don"t u think the opening of 30 branches during the year of 2010 will impact the cost income ratio negatively in coming quarters. Then this impact would hit the bottom line...

How do u look into this...



Seyon, you have already answered your own question subsequently.
My opinion...

If I think like a big investor, where can I invest my millions without blinking an eye?
Are there any other options available?
A big investor will want to improve his ROI with a reputable, progressive and a company that has big plans for the future.

Sampath bank has that in their vision. They are not going to sit back and let HNB, COMB, SEYB,BOC get their share of the banking business.
They must have good LTP's for the next 5-10 years. Yes it may hit the bottom line hard, but the major investors are informed and they are on board.

What if Sampath just waits? It's like offering the new business / customers on a platter to the rest of the big banks! Like Gambir said:Quote: we are here not just to participate in the game. We are here to win" Unquote.


So I prefer if Sampath does something with my money that I cannot do and they are best geared to do. May I have good ROI in the years to come.

Go long term with Sampath.






23BANKING SECTOR Empty Re: BANKING SECTOR Mon Apr 18, 2011 2:57 am

UKboy

UKboy
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

Good point hybrid_OS.

24BANKING SECTOR Empty Re: BANKING SECTOR Mon Apr 18, 2011 7:24 am

seyon


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

hybrid_OS wrote:
seyon wrote:
hybrid_OS wrote:
tubal wrote:I do appreciate Seyon's hard work. Well done.
buf if you ask me (and no one is asking me :-) ), unimaginative brokers are promoting the banking sector and most investors are falling hook line and sinker for it. When the interims start coming out, we will find that once you deduct the extra-ordinary items, eps growth is very ordinary.

You will also find that the central banks increase in the reserve ratio will have a negative impact on the banks bottom line.

Agree with tubal to some extent. Banking sectors has seen better days.
In my opinion Sampath is the most secure investment though you will not lose with others mentioned above.

Prudency in showing higher provisions for bad debts is not a negative sign. Actually, to the contrary it gives an investor more confidence.

Profits will be marginal though. Cannot expect anything exceptional.

Hi hybrid

For the SAMB don"t u think the opening of 30 branches during the year of 2010 will impact the cost income ratio negatively in coming quarters. Then this impact would hit the bottom line...

How do u look into this...



Seyon, you have already answered your own question subsequently.
My opinion...

If I think like a big investor, where can I invest my millions without blinking an eye?
Are there any other options available?
A big investor will want to improve his ROI with a reputable, progressive and a company that has big plans for the future.

Sampath bank has that in their vision. They are not going to sit back and let HNB, COMB, SEYB,BOC get their share of the banking business.
They must have good LTP's for the next 5-10 years. Yes it may hit the bottom line hard, but the major investors are informed and they are on board.

What if Sampath just waits? It's like offering the new business / customers on a platter to the rest of the big banks! Like Gambir said:Quote: we are here not just to participate in the game. We are here to win" Unquote.


So I prefer if Sampath does something with my money that I cannot do and they are best geared to do. May I have good ROI in the years to come.

Go long term with Sampath.




Yes for the long term it is ideal...

25BANKING SECTOR Empty Re: BANKING SECTOR Mon Apr 18, 2011 8:28 pm

ShareShares


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

seyon wrote:Hi Friends

This brief analysis is connected to my previous analysis (http://forum.srilankaequity.com/t2231-banking-sector-analysis-combhnbseybntbsambdfcchdfcndbpapc-and-mbsl) and this analysis in briefing the financials comparing with previous year and including main features (key balances and numbers) of the retail largest banks. I excluded the DFCC,NDB and HDFC , as their scope is mainly focus on development banking. Further I give certain measures ( KPI- Key Performance Indicators) to interpret the performance. I do not restrict with these KPI, if u have additional measures related to banking industry, Pls share with us..

This is good time to discuss about banking sectors, as expected to see the first quarter results with the new improvement due to tax saving and economic growth. Here we have veteran analyzers with different views, which would help us to have good investment decision and to sharing our knowledge and views.

Following are the my selected KPIs
* Interest Margin
* % of Other Income Out of Operating Profit Operational Cost to Income Ratio
* % Loan Loss Provision out of Total Non Performing Loan
* NPL Raito
* PER
* PBV
* Number of Employees (comment in terms of total assets)


This is My View……………….

When I do the analysis of banks (SEYB,NTB,SAMP,PABC) KPIs ,I took the indicators of COMB and HNB as industry norms ( I may be wrong) as these two banks are relatively strength in the banking industry and analyzed COMB and HNB by comparing each others.

1.SEYB…

Interest Margin – Line with industry

% of Other Income Out of Operating Profit- Very High, out of that 1Bn bad debt written back and recovered

Operational Cost to Income Ratio – Very high % comparing with other banks

% Loan Loss Provision out of Total Non Performing Loan – Comparably High

NPL Raito - Highest Ratio in the Banking Sectors ( this might be improved due to the recent restructured program taken place in the bank and Bank strategic target to reduce to 10% during the year.)

PER - Trading @ 15X which is slightly low comparing with other retails banks. This impact is due to the recent Rights issue

PBV- Very Low… This also may be due to the recent Rights issue

Number of Employees – Very High

2.NTB

Interest Margin – Line with industry

% of Other Income Out of Operating Profit- Very High, out of that 1.3Bn reported as fees and other income ( no details given) this may
be due to the unrealized gain on fair value adjustment.

Operational Cost to Income Ratio – Very high % amongst other banks

% Loan Loss Provision out of Total Non Performing Loan – Comparably High, However comparing with previous year good improvement.

NPL Raito – Good, line with industry…

PER - Trading @ 18x, Fairly trading @ Industry average

PBV - Line with Industry

Number of Employees - Comparably high

3.SAMP

Interest Margin – Line with industry

% of Other Income Out of Operating Profit- Slightly High, out of that Capital Gain on Sale of LBFL shares 654Mn , Bad Debt Recoveries
1.2Bn and Recovery of Impairment of Investment 1.3Bn. Hence Recovery of impairment and Capital gain are non recurring items amounts to Rs.2Bn.

Operational Cost to Income Ratio – Par with industry
% Loan Loss Provision out of Total Non Performing Loan – Very High reporting @ 12% due to the bank made additional specific credit
loss provisions of Rs. 1,344.9 Mn, over and above the amounts recommended by the Central Bank of Sri Lanka ignoring collateral values.

NPL Raito – Good, and Well managed

PER - Trading @ 14x, is Low comparing with other bank, However, taking out the non recurring income Rs.1.3Bn, then PE would be trading above the average.

PBV - Line with Industry

Number of Employees – Fairly ok. We could see there were new recruitment about 300 staff due to addition of 30 new branches during the year.

4.PABC

Interest Margin – Slightly high margin with other banks

% of Other Income Out of Operating Profit- Fairly Good

Operational Cost to Income Ratio – Par with industry

% Loan Loss Provision out of Total Non Performing Loan – Improved comparing with previous year. Par with the industry

NPL Raito – Above the industry average, however it is improved comparing with previous year.

PER - Trading @ 21x, is high comparing with other bank.

PBV - Line with Industry

Number of Employees – Comparably High..

5.HNB

Interest Margin – Par with industry

% of Other Income Out of Operating Profit- Comparing with COMB contribution is high, that is due to the capital gain of sales quoted investment amounts 600Mn

Operational Cost to Income Ratio – Reporting @76% comparing with COMB, ratio is high

% Loan Loss Provision out of Total Non Performing Loan – Well Maintained at very low level

NPL Raito – Reporting at 5% , Very lower level

PER - Trading @ 20x, is high comparing with other bank.

PBV - Line with Industry

Number of Employees – Little bit high compare to COMB employees with the total assets.


6.COMB

Interest Margin – Par with industry

% of Other Income Out of Operating Profit- Reporting at 33%, Lowest contribution to operational profit.

Operational Cost to Income Ratio – Reporting @ 61% very lowest amongst the banks.

% Loan Loss Provision out of Total Non Performing Loan – Well Maintained at very low level

NPL Raito – Reporting at 7% , a little bit higher compare to HNB

PER - Trading @ 19x

PBV - Line with Industry

Ok, there can be some differ view on the interpretation and comparison of KPI or additional measures to be brought to have good analysis.

So Pls share ur thoughts and views on the KPI or If u have some additional / different measures to be adopted… Pls contribute that with the analysis

Thanks in advance

Find the attachment of Brief Analysis of Banking Sector












Thanks for the analysis. All banks should show momentum. I am looking for movement for several months, so many different banking sector shares. Next quarter results should initiate a real momentum. Still only few shares are moving in the portfolio. There should be an overall improvement in the share market. After 20th, real growth can be expected as many investors discussed in this forum. Turn over was gradually improving.

Sponsored content



Back to top  Message [Page 1 of 12]

Go to page : 1, 2, 3 ... 10, 11, 12  Next

Permissions in this forum:
You cannot reply to topics in this forum