Sometimes a DNA India can give you more quality than an ET copy with your morning cuppah! 

Though that also means the daily offers more economic analysis than the insides of the political theater, it is a pleasure to read the DNA and to just create fresh content based on that analysis without complimenting them would be a menial job, right!. The analyses in question are on 1. Banking, Personal Loans market on pg. 11 then the Real Estate Market growth specifics in FY2011 and now and thirdly an unprecedented effort to catch all of  News Corp ventures in india in a factual manner on page 12.

The last one esp because though it has all hppnd in my post MBA career, I have no way to piece it together myself, India's data archives being a solid non starter and discouragement for those of us willing to make a career out of it. That includes the distribution business which was instrumental in discussing the norms for satellite, Direct and more, the content business including 18 GECs and news ("broadcast from foreign soil") and more..Now back to an effective commentary on the Banking markets

A good quality analysis of the Indian Banking Markets

Deposits rates have been growing in India after a savings rate increase and deposit rates increased by banks since the rates began rising in more than baby steps (raised 10 times in 18 months and still rising) In Q4 i.e. March 2011 we had reached nearly 88% in Credit Deposit Ratios,  Incremental rates since may bring the Loans ratio to Deposits to a more manageable 75% close to the RBI target Still the excess Deposits need to be deployed and with cost of deposits increasing, the Indian Bankers, used to a high NIM turf will try to revert abck to the retail market for loan offtake. 

As per the DNA analysis, India's Personal Loan (Unsecured only excl. Autos and Equity loans and without incl Credit card debt) book is close to INR 7 tln ( 10% of 2011 GDP ) while many banks had shut down this 16-24% rate business in 2008 HDFC Bank is looking for customers again with a current book of Rs 10000 Crores or Rs 100 bln, a wealth bank like Kotak ay behind at Rs 15 bln, looking for existing relationships only.

The personal loans market is growing at an annual rate of 20-25% again but MNC banks have totally exited the business, with runoffs on mortgage portfolio compoundeed by the problem at Citi's servicing unit Shelters

Apart from the Personal Loans opportunity, banks will also naturally gravitate to rebuilding its real estate portfolio, this time thru refinancing of NBFC loans to the sector. The real estate market growth has however topped off in 2010-11 due to the lack of fianancing early and then the demand shock from high prices hitting the sector. The sector relies on staying power to negotiate and there is a distinct inelasticity in supply making lower prices virtually impossible to achieve in 3- 6 months. thus both the opportunity taps in Personal and CRE loans, being against the grain of those who think the crisis was a sign from God against greed, will face a distinct resistance in credit unfriendly Indian markets but with good underwriting banks can continue to make good profits on the business. NBFC rates are already benchmarked at higher yields and that means Real estate players are aalready making lower profits this time. 

 

 

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