PUBLIC SECTOR (LARGE) BANKS = Q2 FY 2011 RESULTS = COMPARATIVE REVIEW = PUNJAB NATIONAL BANK = CANARA BANK = BANK OF BARODA = BANK OF INDIA =IDBI BANK

PUBLIC SECTOR BANKS

LARGE BANKS

A REVIEW OF Q2 RESULTS DT 26.11.2010

Most of the Banks in Private and Public sectors fared well in Q2 FY2011. But, how did they fare on a comparative basis within their respective groups?

We will start with public sector Banks having Gross (total) Income of Rs.5000 cr and above in Q2 FY2011, which translates into a total annual income of Rs.20,000 Cr and above. We will exclude State Bank of India (and its subsidiaries) from the review – as they stand on a different footing from other commercial Banks in Public sector.

We are comparing Punjab National Bank, Canara Bank, Bank of Baroda, Bank of India, IDBI Bank – which are all large Banks and we have arranged them in descending order of their quarterly incomes in the table below to facilitate easy comparison :

Total Income:  Rs.7174 Cr for PNB; Rs.6077 Cr for CB (18% less from PNB); Rs.5840 Cr for BOB (23% less from PNB); Rs.5740 Cr for BOI (25% less from PNB); and Rs.5069 Cr for IDBI Bank (42% less from PNB);

Net Interest Income (interest income – interest expended)  :  Rs.2977 Cr for PNB; Rs.2003 Cr for CB (49% less from PNB); Rs.2038 Cr for BOB (46% less from PNB); Rs.1776 Cr for BOI (68% less from PNB); and Rs.1168 Cr for IDBI Bank (155% less from PNB).

Operating Profit: Rs.2100 Cr for PNB; Rs.1416 Cr for CB (48% less from PNB); Rs.1657 Cr for BOB (27%  less from PNB); Rs.1380 Cr for BOI (52% less from PNB); Rs.1026 for IDBI Bk (105% less from PNB).

Provisions: Rs.516 Cr for PNB; Rs.158 Cr for CB (227% less from PNB); Rs.185 Cr for BOB (179% less from PNB);    Rs.527 Cr for BOI (2% more from PNB); Rs.442 Cr for IDBI Bk (17% less from PNB);

Net Profit: Rs.1075 Cr for PNB; Rs.1008 Cr for CB (7% less from PNB); Rs.1019 Cr for BOB (5.5% less from PNB); Rs.617 Cr for BOI (74% less from PNB); Rs.429 Cr for IDBI Bk (151% less from PNB);

Paid-up Equity: Rs.315 Cr for PNB; Rs.410 Cr for CB (30% more than PNB); Rs.366 Cr for BOB(16% more than PNB); Rs.526 Cr for BOI(67% more than PNB); Rs.984 Cr for IDBI Bk (212% more than PNB).

% of Gross/Net NPA: 0.69 for PNB; 1.06 for CB;  0.38 for BOB; 1.14 for BOI; and 1.19 for IDBI Bank. This percentage is very comfortable for PNB and Bank of Baroda. But, not so comfortable for the other three.

Return on Assets : EXCELLENT for PNB at 1.36; for CB at 1.52; and 1.34 for BOB;  Just moderate for BOI at 0.87; and at 0.77 for IDBI Bank.

Capital Adequacy Ratio is very good for all. It is 11.65 (lowest) for PNB; 13.88 for CB; 12.34 for BOB; 12.27 for BOI; and 14.17 (highest) for IDBI Bank.

Basic EPS: EXCELLENT for PNB at Rs.34.08; very good for CB at Rs.24.58; very good for BOB at Rs.27.98; Good for BOI at Rs.11.74; and  just satisfactory at Rs.4.77 for IDBI Bank.

ANNUALIZED EPS : This, if annualized by multiplying by 4 Qtrs, comes to Rs.136.32 for PNB; 98.32 for CB; Rs.111.92 for BOB; Rs.46.96 for BOI; and Rs.19.08 for IDBI Bank.

Assuming future performance will be just on the same lines – how do they compare in terms of performance?

LAST MARKET PRICES : PNB : Rs.1152 ; Canara bank : Rs.694 ;  BOB : Rs. 894 ;  BOI : Rs.429 ;  IDBI Bank : Rs.158 ;

CURRENT PE RATIOS :8.45 for PNB; 7.06 for Canara Bank; 7.99 for Bank Of Baroda; 9.14 for Bank of India; and 8.28 for IDBI Bank.

BANK-WISE PERFORMANCE REVIEW

IDBI BANK :

It already has the highest paid up equity base of Rs.984 cr which is 212% more than PNB; Compared to PNB - Its total income less by 42 %; NII is less by 155%; OPT is less by 105%; Provisions are less by 17% ; NPT is less by 155 %;

Its % of Gross/Net NPA is very high at 1.19; Return on Assets is the lowest at 0.77. Capital Adequacy Ratio is highest at 14.17; But, PE Ratio is almost equal at 8.28 compared to 8.45 of PNB.

BANK OF INDIA :

It also already has a huge paid up equity capital base of Rs.526 Cr (67% more than PNB); Compared to PNB - Its total income is less by 25%; NII is less by 68 %; OPT is less by 52%; NPT is less by  74%; Provisions are 2% more ;

% of Gross/Net NPA is very high at 1.14; Return on Assets is lower at 0.87. Capital Adequacy Ratio is high at 12.27  ; But, PE Ratio is HIGHER at 9.14 compared to 8.45 of PNB.

BANK OF BARODA :

It has a reasonably low paid up equity capital base of Rs. 366 Cr (16% more than PNB); Compared to PNB - Its total income less by 23%; NII is less by 46%; OPT is less by 27%; Provisions are 179% less; NPT is less by a marginal 5.5%; 

% of Gross/Net NPA is 0.38, the lowest in this group; Return on Assets is 1.34  which is quite high. Capital Adequacy Ratio is high at  12.34  ; PE Ratio is  7.99 compared to 8.45 of PNB. It is closing its gap with PNB in recent qtrs.

CANARA BANK :

It has a paid up equity capital base of Rs. 410 Cr for CB (30% more than PNB); Compared to PNB - Its total income less by 18%; NII is less by 49%; OPT is less by 48%; Provisions are 227% less from PNB; NPT is less by a marginal 7 %; 

 % of Gross/Net NPA is very high at 1.06; Return on Assets is 1.52, the highest in the group. Capital Adequacy Ratio is EXCELLENT at  13.88; But, PE Ratio is  7.06, the LOWEST IN THE GROUP compared to 8.45 of PNB. Canara Bank has been catching up quite well with PNB and BOB in recent Qtrs. Its performance is no less than that of BOB as of now.

PUNJAB NATIONAL BANK :

It is evidently the Best Bank in the Group. It has THE LOWEST paid up equity capital base of Rs. 315 Cr  in the Group. Its total income is Rs.7174 Cr, the HIGHEST in the group; NII is Rs.2977 Cr, again the HIGHEST  in the Group; OPT is Rs.2100 Cr , the HIGHEST  in the Group; Provisions are Rs.516 Cr, which is quite HIGH – second only to BOI’s rs.526 cr and a serious point of note for PNB. NPT is Rs.1075 Cr, HIGHEST in the Group, but it must be said that Canara Bank and Bank of Baroda also have crossed Rs.1000 Cr NPT comfortably and are likely to run neck to neck with PNB in future. % of Gross/Net NPA is quite LOW at 0.69; Return on Assets is excellent at 1.36. Capital Adequacy Ratio is high at 11.65, but is still the lowest in the group and needs improvement ; But, PE Ratio is 8.45 of PNB – compared to 7.06 for Canara Bank; 7.99 for Bank Of Baroda; 9.14 for Bank of India; and 8.28 for IDBI Bank.

SUMMARY :

Considering their EXCELLENT PERFORMANCES, and promising future – PNB, Canara Bank and Bank of Baroda seem to be excellent investments for the medium / long term.

BOI and IDBI Bank are also good investments – though not on par with the other three.

Table of Q2 FY 2011 results :

PSBS Q2 FY 11	PNB	CAN BNK	BK OF BARODA	BK IOF INDIA	IDBI BK
Interest on Advances	503520	410956	383828	365979	338696
Income on Investments	139718	141652	115654	130715	118362
Interest Earned	645544	557744	515866	515555	457728
Other Income	71825	49962	68130	58450	49211
Total Income	717369	607706	583996	574005	506939
Interest Expended	347874	357414	312052	337950	340924
NII	297670	200330	203814	177605	116804
Employees cost	111309	72744	65616	60308	34232
Other Operating Expenses	48177	35971	40654	37787	29220
Operating Expenses	159486	108715	106270	98095	63452
Total Exp E P A C	507360	466129	418322	436045	404376
Operating Profit	210009	141577	165674	137960	102563
Provisions	51603	15789	18549	52736	44153
P B T	158406	125788	147125	85224	58410
Tax Expense	50952	25000	45195	23546	15500
P A T	107454	100788	101930	61678	42910
Net Profit	107454	100788	101930	61678	42910
F.V(Rs.)	10	10	10	10	10
Paid-up Eq.	31530	41000	36553	52591	98442
%age Held by GOI	57.8	73.17	53.81	64.47	65.14
Capital Adequacy Ratio	11.65	13.88	12.34	12.27	14.17
Basic EPS	34.08	24.58	27.98	11.74	4.77
% of Gross/Net NPA	0.69	1.06	0.38	1.14	1.19
Return on Assets	1.36	1.52	1.34	0.87	0.77
Public holding (%)	42.2	26.83	46.19	35.53	34.86

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RAKESH JHUNJHUNWALA = THE BIG BULL OF INDIAN MARKETS = What he says & does

RAKESH JHUNJHUNWALA

What he says & does

Rakesh Jhunjhunwala is India’s most well known and successful Investor. He is one of the Big Bulls of India, who ardently believes in the India Growth Story.

He is a chartered accountant but started as a trader and investor in 1983. He runs his Rare Enterprises company from offices in Mumbai's Nariman Point business area. His company’s name ‘RARE’  is derived from the first 2 letters of him self and his wife : Rakesh + Rekha . Rakesh says, "My company has only one client -- my wife -- so that I don't need to handle others' money."

Let us look at some of his views – to understand his market philosophy – and perhaps, his life philosophy as well. I have made some of the key words in bold and italics, and have also inserted some comments in brackets, to amplify the context and the meaning of his words - for the benefit of readers.

What Rakesh says :

·         ABOUT MARKETS:

·         Markets are like women -- always commanding, mysterious, unpredictable and volatile.

·         The market is always right. Markets cannot be taught, they have to be learnt.

·         The country is poised to soon achieve a double-digit economic growth along with an impressive corporate profit growth. This is bound to drive the bourses

·         It does not take rocket science to understand that India's economic growth will be in double digits.

·         Study the market thoroughly. Refer to history

·         Corrections, however sharp, are indispensable

·         (As readers can see – Rakesh is extremely optimistic about the future prospects of India and Indian Markets. But, Markets are volatile and unpredictable. It presents many opportunities by its very nature itself. We need to seize these opportunities)

·         ON INVESTOR TEMPERAMENT :

·         If in doubt, listen to your heart.

·         Necessary for any investor is optimism.

·         Always have an independent opinion. Observe and read relevant information with an open mind.

·         Be happy with your gains but learn to accept losses with a smile.

·         Be opportunistic but wait for the right moment

·         Do something you love

·         Aspire, but never envy

·         Be paranoid of success -- never take it for granted.

·         Realise success can be temporary and transient

·         The means are as important as the end.

·         Be prepared for challenges and risks.

·         Whatever you can do or dream - you can, begin it.

·         Boldness has genius, power and magic in it.

·         When you see a horizon, it seems so distant. When you reach that horizon, you will realize how many more horizons are within reach.

·         We must have an attitude where we must balance fear and greed.

·         Invest, have faith in India. It doesn’t change. It’s the same. Expect a reasonable return, invest for the long term, take expert advice, have faith in equities and India. That’s what I have done.

·         (This is what the ace Investor, Rakesh wants us to have in our attitudes – if we are to succeed in Indian Markets).

·        ON MARKET TACTICS & MOVES:

·         Maximise profits and minimise losses.  

·         (What this means is :- Don’t hold on sentimentally to a company shares. Book Profits and Book Losses at the appropriate time)

·         Invest in a business not a company.

·         (What this means:– that you must look at the growth prospects of the business, the company is in, much more than the present profit and loss an balance sheet. You are looking at the future – not merely the present)

·         Build a fighting spirit -- take the bad with the good.

·         Don’t look for multibaggers. Don’t seek them at all. Let the multibaggers come to you.

·         (Note : This means – Make your analysis, be absolutely satisfied about growth prospects of the company and invest. It will become a multi bagger)

·         If your homework is right and you have invested in fundamentally sound companies with good growth prospects, your investments will by themselves become multibaggers with the passage of time.

·         Look at the sources of Profits. What are the reasons that will give rise to Profits in the medium and long-term term.

·         (This means :– do not just look at current profits – but look at where they came from, whether these sources of profit are stable and expanding or not. Look at their future scope)

·         Look at the factors and circumstances that will create an opportunity for business in the sector.

·         (This means : Look at future opportunities for the company’s business – whether it has sufficient growth potential or not)

·         If there is value in Large Cap, buy it. If there is value in Small Cap, buy it. But don’t obsess on irrelevant matters.

·         (This means :- whether large cap or small cap – look at its intrinsic value and growth potential and then BUY).

·         Give your investments time to mature. Be Patient for the World to discover your gems. Never get carried away by aberrations, recognize and respect them but do remember that the market corrects its aberration though it takes time.

·         (This is an excellent advice which Warren Buffet also repeats several times. Be Patient with your investments, allow them time to mature into their huge Potential)

·         Don’t worry about things that you neither know about nor can do anything about. It’s not important. Instead focus your energies on what you can and should know well enough – the business of the company you are investing in.

·         (This means : Macroeconomic factors, world economic factors etc are not that relevant in judging the Potential of a company. While you need not ignore them, know that your knowledge of them can be very limited and their effect on the long term prospects of your company also will be limited)

·         If you see the opportunity today, GRAB IT! Many wonderful opportunities are lost to procrastination and then you rue your missed opportunities.

·         (This means : Don’t wait for prices to fall to rock bottom to seize an excellent opportunity which you are seeing today. For long term investors, seizing today’s opportunity is more important)

·         Panic selling during a sharp fall is the worst thing to do

·         (As we can all see it – when prices are falling – many investors rush to the market to SELL!. That is the worst thing to do.)

·         Stay invested and calm when the markets nosedive.

·         (Markets will have corrections. What goes down will come up  and with renewed vigour. Know that and stay calm)

·        ON TRADING :

·         I think for a retail investor, don’t trade please. Because I think 98% of retail people lose money in trade. Whether correction - no correction, bull phase – bear phase. Everyone has a sad story. The proof is in the statistics and we know people will say, you trade yourself but stop others from trading, I say dad used to drink whisky and asked us to refrain from it.

·         What about HNIs? What would you tell them who are slightly more sophisticated?  A: Don’t trade.

·         HIS WEB SITE :

·         Investors may also read his ‘secret Journal’ at http://www.rakeshjhunjhunwala.in/ - just to know his lively nature.

Let us now look at his current Portfolio :

Company  :: Investor Name  ::  No. of Shares

Agro Tech Foods ::     Rekha Jhunjhunwala :: 849559

Agro Tech Foods :: Rakesh Jhunjhunwala :: 1153700

APTECH :: Rekha Jhunjhunwala :: 2000000

APTECH :: Rakesh Jhunjhunwala :: 3152100

ALPHAGEO (INDIA) :: Rakesh Jhujhunwala  :: 125000

AUTOLINE INDUSTRIES :: Rakesh Jhunjhunwala :: 520000

AUTOLINE INDUSTRIES :: Rekha Jhunjhunwala :: 731233

Bilcare :: Jhunjhunwala Rakesh Radheshyam :: 1735425

Bilcare :: Jhunjhunwala Rekha Rakesh :: 267500

Crisil :: Jhunjhunwala Rakesh Radheshyam :: 550000

GEOJIT BNP PARIBAS FINANCIAL SERVICES :: Rakesh Jhunjhunwala  :: 18000000

Geometric :: Jhunjhunwala Rakesh Radheshyam  :: 3955000

Geometric :: Rekha Jhunjhunwala :: 850000

HINDUSTAN OIL EXPLORATION COMPANY :: Jhunjhunwala Rekha Rakesh :: 1887273

HINDUSTAN OIL EXPLORATION COMPANY :: Jhunjhunwala Rakesh Radheshyam  :: 4785143

ION EXCHANGE (INDIA) :: Rakesh Jhunjhunwala :: 650,000

KAJARIA CERAMICS :: Rakesh Jhunjhunwala  ::  2502642

KARUR VYSYA BANK :: Rakesh Jhunjhunwala Group ::             2041172

Lupin Ltd :: Jhunjhunwala Rakesh Radheshyam  :: 2183581

Lupin Ltd :: Jhunjhunwala Rekha Rakesh :: 1065254

Mcnally Bharat Engineering Company :: Jhunjhunwala Rekha Rakesh :: 480078

Pantaloon Retail (India) Ltd.-B-Dvr :: Jhunjhunwala Rekha Rakesh :: 210589

PRAJ INDUSTRIES :: Rakesh Jhunjhunwala :: 11678624

Prime Focus :: Jhunjhunwala Rakesh Radheshyam :: 250000

Prime Focus :: Jhunjhunwala Rekha Rakesh :: 632500

PROVOGUE (INDIA) ::Rakesh Jhunjhunwala ::     1900000

PUNJ LLOYD :: Rakesh Jhunjhunwala  :: 3790000

Rallis India :: Jhunjhunwala Rakesh Radheshyam  ::  602007

RISHI LASER :: Rakesh Jhunjhunwala  :: 380,000

Srei Infrastructure Finance ::  Jhunjhunwala Rekha Rakesh :: 1250000

Titan Industries :: Jhunjhunwala Rakesh Radheshyam :: 2828455

Titan Industries :: Jhunjhunwala Rekha Rakesh :: 981694

V.I.P.Industries ::  Jhunjhunwala Rakesh Radheshyam :: 380000

Viceroy Hotels ::  Jhunjhunwala Rakesh Radheshyam :: 4250000

Viceroy Hotels :: Jhunjhunwala Rekha Rakesh  ::  500000

ZEN TECHNOLOGIES :: Rekha Jhunjhunwala  ::  450,000

ZEN TECHNOLOGIES :: Rakesh Jhunjhunwala  ::             450,000

At the end, this blog wishes Rakesh Jhunjhunwala all success and prosperity in future as well. He is adorable and admirable for the sheer optimism he spreads all around him and is therefore the Biggest Bull of Indian Markets.

We want to see and hear more and more of such success stories in India. This  Blog also wishes readers the same (and even higher) level of success as Rakesh in future.

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