Report by India Independent Insight
Iii’s interactions with DSAs (Direct Selling Agents) raises alarms with regards to the company’s lending practices especially in the affordable housing segment. While affordable housing as a total book may be small, Iii anticipates pressure on NIMs and growth. Recent regulatory actions involving companies like Kotak, IIFL and Paytm have resulted in substantial declines in their respective stock prices.
Report by Galliano's Financials Research
Victor Galliano favours four longs and one short as his conviction calls for the year ahead. 1) Bank Mandiri (Indonesia) continues to generate improving returns and has strong capital ratios, credit quality and liquidity metrics. 2) KB Financial (South Korea) is a deep value pick. 3) China Merchants Bank is a contrarian pick, which looks well positioned to confront concerns re. Chinese NPLs and also on very attractive valuations. 4) Banco do Brasil screens well re. valuations and returns; its growth potential also looks particularly appealing. 5) Victor’s key sell is Kotak Mahindra Bank (India) as it is richly valued, exposed to low prospective earnings growth and has low credit quality coverage.
Report by Hemindra Hazari
The backdoor entry of Uday Kotak into the board of directors of KMB after he steps down as the CEO at the end of the year should be recognised for what it is, namely, a method of exercising control over the bank without being saddled with executive responsibilities. This decision also reflects poorly on the board of directors for not taking CEO succession seriously for two decades. When a prominent entity in the financial system has a history of disdain towards the regulators and finds loopholes to permit the founder to exercise control, stakeholders should be concerned.