The economic slowdown is likely to weigh on the credit offtake of the banking system, but brokerage firm BNP Paribas says in India the sector will recover, thanks to lower cost of funds, cost efficiencies and lower tax.The brokerage said higher operational efficiency driven by digital initiatives and lower workforce requirements will ensure that the cost to income ratio maintains its downward trajectory."We believe a lower cost of funds, cost efficiencies, and the benefit from lower tax rates should lead to return on equity (RoE) accretion of 370bps for private banks. Higher RoEs should warrant much higher price-to-book ratios (P/Bs). We see a 10-15 percent upside from current valuations for private banks over the next five years," said BNP Paribas.Close Given that the asset quality cycle has peaked, the credit cost should be lower than those in the previous cycle, the brokerage said. related news Sensex at record high but midcaps likely to generate wealth; 20 stocks … [Read more...] about Banking set to see a recovery, life insurance the next big sector: BNP Paribas
Challenges top gear
Life insurance and asset management companies (AMC) are likely to be high-growth businesses due to the financialization theme that is playing out, Rusmik Oza, Head of Fundamental Research, Kotak Securities, says in an interview to Moneycontrol’s Kshitij Anand.Edited excerpts:Close Q) What is your assessment of the September quarter earnings? If you had to describe them in one word, what would that be? What were the highlights?Rusmik OzaHead of Fundamental Research|Kotak Securities 'Corporate tax cut will boost earnings by 15-20%; HDFC Bank, ONGC, M&M among 20 cos to benefit the most'Cement, oil & gas among 3 sectors likely to outperform; here’s why'Nifty unlikely to test 12,000; expect the slump in earnings to continue in Sept quarter'A) If one has to summarise the September quarter results in one word, it would be ‘Decent’. Further, if it needs to be summarised in a sentence, it would be ‘Optically healthy on earnings, due to corporate … [Read more...] about Don’t miss! Stocks from life insurance and AMC likely to be included in Sensex & Nifty
Tata Steel Europe's European Works Council, the body representing the employees, will meet on November 27 to formally discuss the company's transformation programme that entails 3,000 job cuts across operations in the continent.Voicing its displeasure against the planned job cuts announced by Tata Steel, the European Works Council, or EWC, said 'employees should not pay the price for Tata's failures' despite the challenges that the company is facing due to the current economic slowdown.The job cuts announcement on November 18 has riled the employees of Tata Steel Europe's units in the UK and the Netherlands, prompting trade unions to consider approaching the European Parliament and even an industrial action.Close "The employee representatives would like to be clear that while there are challenges across Tata Steel Europe, this transformation programme is a direct result of the company's failure to deliver the joint venture with thyssenkrupp and the complete absence of any Plan B," … [Read more...] about Tata Steel Europe| Union representatives to meet management next week
Rising debt in United States (US) could hurt current expansion and a tighter labour market could raise inflation, former Federal Reserve Chairman Alan Greenspan said in an interview to Bloomberg Television.“I’m beginning to see the first signs of it,” Greenspan told the news agency talking about inflation in the US economy.The Federal Reserve, which has set an inflation target of 2 percent, last week held its interest rates.Close Greenspan, who headed the Federal Reserve from 1987 to 2006, pointed out that the recent hike in average wages was not supported by productivity. related news Cube Highways bids Rs 5,011cr to bag third TOT bundle: Report China may reach 'Phase One' trade deal with US this year: State economist China still faces severe external, internal challenges: Vice president Wang Qishan “We’re seeing it basically in the tightening of the labor markets first, which, as you know, have gotten very tight now. We’re beginning … [Read more...] about Beginning to see first signs of inflation through tighter labour market: Alan Greenspan
With banks increasingly facing the problem of bad loans, what can help them distinguish between good borrowers and bad ones? This is where the RBI’s Public Credit Registry or PCR comes in.The proposed repository of financial data will contain information about all borrowers. Sakshi Batra talks to Gaurav Choudhury, Deputy Executive Editor, Moneycontrol, to find out why this is an important step, what the implications are and the challenges in implementing this.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app. … [Read more...] about [email protected] | Why is RBI’s public credit registry important?