People say banks will be dead Fintech's will rule lending, so lets clear some air form RBI data
Loans through Digital Channels by Banks and NBFCs-growing year on year
NBFCs are far ahead, disbursing around 60% of their loans through Digital compared to 6% for banks (by count)
1/n Share by value of loans disbursed - Private banks share in Digital loans is 55%, NBFCs have a 30% share by value.
2/n

There is a myth among investors, Gold Loans business is risky. Let me clear this myth with some data.
Gold loans is the safest business for a lender.

In Q1, CSB auctioned Rs 47 Cr of gold loans, the principal loss was Rs 1 Cr. They are pretty sure to recover this loss.....
1/3 ....through recoveries.
They update the default in Credit Bureau & customers come back to pay and get their credit history regularized.
In Q1 CSB has slippages worth 447 Cr out of which gold loan slippages were 337 Cr. Bank is very confident to recover the entire.....
2/3

Excerpt from the book "This time it's Different"
If there is one common theme to the vast range of crises, it is that excessive debt accumulation, whether it be by the government, banks, corporations or consumers, often poses greater systemic risks than it seems during a boom
1/4 Infusions of cash can make a government look like it is providing greater growth to its economy than it really is. Private sector borrowing binges can inflate housing and stock prices far beyond their long-run sustainable levels, and make banks seem more stable and profitable
2/4

Why I chose following stocks
Hemisphere - was carved out of Tata Comm, it had 750 acres of land bank. The value of land bank was around 19000 Cr on books and market cap was only 3000 Cr
Found to be undervalued.
Invested with a 3-4 yr horizon but stock doubled in 2 months Subex- was a turnaround story, balance sheet was cleaned up, debt has been paid back, share capital restructured and company had started to do well, Invested at Rs 25 thinking it was a low risk idea for the long term.

"There is many a times a slip between the lip and the cup"

No better way to explain my real life example that took place 29 years ago !!
Will share soon My first real taste of failure at age 23 !!
I was born in a family of fauji's - my grandfather was in the army having fought the second WW in Italy under the British Indian Army, my father & his younger brother too served in the Army
Having grown up seen
1/n

Difference Intelligence and Wisdom.

1. Intelligence leads to arguments, Wisdom leads to settlements.
2. Intelligence is power of will, Wisdom is power OVER will.
3. Intelligence is heat, it burns, Wisdom is warmth, it comforts.

1/6 4. Intelligence is pursuit of knowledge, it tires the seeker, Wisdom is pursuit of truth, it inspires the seeker.
5. Intelligence is holding on, Wisdom is letting go.
6. Intelligence leads you, Wisdom guides you.

2/6

An excerpt from Mahabharata

While the Battle of Kurushetra was at its peak, Arjuna and Karna were fighting each other. It was a battle to witness, a flurry of arrows were being exchanged, and even Gods were witnessing this epic battle between the 2 warriors.

1/n Arjuna would shoot his arrows and the impact of these arrows would be so much that Karna’s chariot would go back by 25-30 feet. People who witnessed this were amazed by the skills of Arjuna.

2/n

Starting with a thread on how to identify a good company for investment
Will post one point every day that an investor should look for before investing

"What to look for in a stock"

So here goes today's #1

1/2 # Does the company have products or services with sufficient market potential to make possible a sizeable increase in sales for the next many years?

2/2

My view of HDFC Bank downgrade by a brokerage firm
1. HDFC has excellent risk management & underwriting process in place, best in class among Indian banks both in retail & corporate business
2. HDFC uses application score cards & credit scroring for lending to retail clients
1/n 3. They also use behaviour scores for cross selling loan products
4. Most of the time they have history of the borrower through the savings account that customer has with HDFC
5. Lending to retail diversifies the risk across many borrowers
2/n

A comparison of Indian Mutual Fund players
1. There are 40 MF players in India
2. Total Qtly AUMS as of Dec’19 at Rs 2,674,583 Cr
3. Top 10 MFs control Rs 2,238,773 Cr of AUM
4. Top 10 MFs have 84% market share
5. SBI MF saw biggest jump in AUMs at 32K Cr in Dec Qtr

1/3 6. ABSL MF saw a drop of Rs 3900 Cr in AUMs in Dec
Qtr
7. Only 2 MFs companies are currently listed on
exchanges
8. Top 3 players control 41% of AUMs

2/3

A thread on Gross & Net NPAs
1 A loan gets classified as NPA if interest or principal amount remain unpaid for 90 days or more
2 Bank has to suspend interest on the loan account, this interest though keeps accruing & is parked in a separate account called-Interest in Suspense
1/n 3 Bank has to reverse the interest income earned in last 90 days which goes to interest in suspense
4 Gross NPA is the total amount of unpaid principal for 90 to 180 days
2/n

Some1 asked me what is capital adequacy ratio for banks
1. Banks give out loans these are called risk assets
2. These loan assets decide how much capital a bank needs to have to reduce risk of insolvency
3. Every loan has a risk weight as per a formula devised by RBI

1/n 4. A unsecured loan like personal loan has higher risk weight assigned
5. A secured loan like mortgage which has a collateral is assigned a lower risk weight
6. All loans put together by risk weightages are called risk weightage assets
7. Capital Adequacy Ratio is measurement
2/n

How retail financial services have evolved in India
1. Till about 1994 there were no new age private banks, RBI gave licenses to 10 entities
2. There was only Citibank who offered car loans and credit cards
3. Only HDFC Ltd was there in private Home Loans space
1/n 3. In mid nineties ICICI Ltd launched their retail products like car and home loans through their subsidiary ICICI PFS
4. In 1998 HDFC Bank launched their retail assets business starting with car, personal and consumer durable loans
5. The loan book mix for private banks
2/n

My thoughts on IDFC First Bank.
Below is the snapshot from Q2FY20 investor presentation.
1. Loan book is 107K crores, this is growing....good sign.
2. 45% of the loans are retail loans, again a very good sign. For comparison HDFC Bank has 55% of retail loans.....1/n 3. CASA ratio is 18.7% & growing. It has grown 10% in last 9 months. Which is very good. Anything over 30% is considered a decent CASA ratio. HDFC Bank CASA ratio is 39.5% & Kotak is 52%. IDFC First has a long way ahead to reach 30%+ ratio.
4. Gross & Net NPA are 2.6% & 1.2%..2/n

A thread on how to evaluate a bank's performance.
1. Look at loan book, the bigger the loan book higher the revenues it will generate.
2. In loan book consider the composition of corporate loans, retail loans and SME loans. If corporate loans are higher the bank....1/n ...is classified as a corporate bank, if retail loan book is more than corporate then it's known more as a retail bank.
3. Retail loans have higher margins than corporate & SME loans.
4. Check for Net Interest Margins. Higher the NIMs better is the profitability.....2/n

A small thread on Life Insurance players & their repective market shares:
1. In overall new premiums YTD till Nov'19 market shares are
* LIC - 71%
* HDFC Life - 6.37%
* SBI Life - 6.33%
* ICICI Pru - 4.17%
* Bajaj - 1.92%
* Max Life - 1.81%
* Kotak - 1.72%
* AB Life - 1 30% 2. In Single Premium policies
* LIC - 75.66%
HDFC Life - 7.87%
* SBI Life - 4.67%
* ICICI - 3 68%
* Max Life - 2.89%
* Kotak - 1.71%
" AB Life - 0.32%
* Bajaj - 0.2%

1. Some interesting facts on the Indian credit card market. This info has been collated from DRHP of SBI Cards.
a) There are 5 cr credit cards issued by banks in India.
b) Credit Card penetration is 3.4% means 3 people out of 100 have a CC
c) Credit Card spends are 3% of GDP. 2
d) HDFC Bank SBI Cards ICICI Bank Axis Bank & Citi are top 5 players in the above order
e) HDFC share of no of cards is 26% followed by SBI at 18% ICICI at 15% Axis at 13% & Citi at 5%
f) Top 4 players account for 76% of total card outstanding