Spark Capital: Banking Weekly – Update for the week ended Dec 13, 2013
Spark Capital Advisors(India) Private Limited
16 Dec 2013
Available for Immediate Download
Banking Weekly – Update for the week ended Dec 13, 2013 What's Inside? • BSE Bankex performance • Spark NBFC index Performance • Bond market update • Key news flow during the week • Fortnightly credit and deposit trends • Key trend charts on bond yields, yield curve, CDS trends, AAA spreads, TED spreads, CD rates, money market trends, gold and forex market trends • Valuation summary of the bank stocks and NBFCs in our coverage Key Takeaways The BSE Sensex was DOWN 1.34% for the week ending at 20716, a decrease of 281 points while the BSE Bankex was DOWN 2.95% (down 394 points) over previous week to end at 12970. The Spark NBFC Index was flat wow to close at 130.1 (Index value:100 on 01/01/2012) The 10Y G-Sec yield was UP 5bps wow ending at 8.91% and the 5Y yield was UP 22bps wow ending at 8.89%. Spread between 10Y and 6M G-sec yields moved DOWN to 6bps, with the 10Y yield (long term rate) ending higher than the 6M yield (short term rate). The 10Y bond yields moved UP in US (2.87%) by 2bps, China (4.61%) by 9bps and moved DOWN in Brazil (4.85%) by 12bps & UK (2.89%) by 1bps. For the fortnight ended Nov 29, credit grew 14.63% yoy while the deposit growth rate at 16.12% has grown at a faster pace than the credit growth rate. During the fortnight, banks’ credit offtake was UP by Rs.127bn while the deposits were UP by Rs.882bn. ICICIBC CDS rate was DOWN wow by 42bps to 322bps while SBIN CDS rate was DOWN 42bps wow to 288bps. The 10Y AAA spread was DOWN 5bps at 0.80% and the 5Y AAA was DOWN 19bps to 0.88%, the 10Y AAA spreads continue to languish below the 5Y AAA spreads. CD rates were DOWN by 19bps for 3M (8.66%) and UP by 8bps for 6M (9.26%) and 9bps for 12M (9.28%). Spread between overnight rate and 12M OIS rate trended lower to 83bps, suggesting that the market is expecting rates to increase by ~83bps from 7.73% in the next 12 months. Call money rate was DOWN significantly to 6.00%, from the 7.40% levels seen during the preceding week. INR depreciated wow against the USD by 0.82%, closing at 62.17 in the spot markets, while the USD/INR forward rates were higher across tenors by ~0.9% wow. Gold price was DOWN 0.6% wow at INR 30,025 per 10gm in INR terms and DOWN in USD terms by 0.5% wow and closed at USD 1,224 per troy ounce.