Latest news with #CommonEquityTier-1
The Star
a day ago
- Business
- The Star
MBSB moves towards major funding rebalancing
PETALING JAYA: MBSB Bhd 's financial year 2025 (FY25) and FY26 are seen as a period of transition that involves a major rebalancing of its funding and financing mix to improve asset quality, says RHB Research. The research house, which had initiated coverage on the stock, noted that the transition would take time to kick in. MBSB continued to hold on to excess capital, which its management intended to utilise for growth while maintaining attractive dividend payouts. Under its Flight26 strategy, the company plans to achieve an 8% return on equity (ROE) by FY26. 'This is premised on a stronger earnings profile from a better funding mix (allowing the group to underwrite better-quality financing without sacrificing net interest margin), enhanced fee income and treasury gains, and operating expenditure discipline,' the research house added. The FY26 target implied a doubling of ROE from the 4% achieved in FY24, albeit below the sector average of about 11%. MBSB commands the highest Common Equity Tier-1 ratio in the sector at 19.4%, with room for further uplift given its sector-high risk-weighted assets density of 74% versus comparable peers' at 55% to 65%. RHB Research said this allowed the group to aim for above-industry financing growth – Flight26 target: FY24-FY26 compounded annual growth rate (CAGR) of 8% – while still preserving capital for consistent and attractive dividend payouts. However, MBSB asset quality metrics lagged that of its peers, it pointed out. MBSB's gross impaired financing (GIF) ratio in 1Q25 stood at 5.5%, well above the 0.5% to 2.2% range of its peers. 'We understand that a significant portion of the group's GIFs come from legacy construction and collateralised personal financing accounts (collectively forming about 30% of total GIFs), but these have a long legal process and recovery period,' it noted. As 95% of GIFs are collateralised, MBSB management is comfortable with its coverage levels, and no significant top-ups to provision buffers are expected. That said, management's focus on lowering cost of funds should allow it to better compete for higher-quality financing, which is positive for future GIF formation and credit cost trajectory. RHB Research projected a 14% FY24-FY27 net profit CAGR, premised on operating income CAGR of 9% from both net financing and non-financing income, positive jaws underpinned by cost discipline and credit costs of 30 basis points (bps) to 35 bps. 'Our earnings forecasts generate an FY26 ROE of 5.4%, which is short of management's 8% target. We also assume a 70% dividend payout ratio versus management's circa 90% informal guidance, which translates to attractive FY25-FY26 yields of 6% to 7%, offering downside support,' it said. It has a 'neutral' call on the stock with a target price of 67 sen per share.
Time of India
2 days ago
- Business
- Time of India
SBI shares in focus as bank prepares for Rs 25,000 crore QIP, first share sale in 8 years
State Bank of India ( SBI ) shares will be in focus on Thursday after the country's largest lender moved closer to raising up to Rs 25,000 crore via a qualified institutional placement ( QIP ) — its first such equity sale in eight years. The capital raise is aimed at bolstering its Common Equity Tier-1 (CET-1) ratio, which stood at 11% as of March 2025 — among the lowest for public sector banks. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Villas Prices In Dubai Might Be More Affordable Than You Think Villas In Dubai | Search Ads Get Quote Kotak Mahindra Capital Co, ICICI Securities Ltd, HSBC Securities and Capital Markets (India) Pvt Ltd, Citigroup Global Markets India Pvt Ltd, Morgan Stanley India Co Pvt Ltd and SBI Capital Markets Ltd are among banks that have been finalised to manage the fundraising, people familiar with the information said. 'The banks have agreed to charge just Rs 1 for this transaction, as it is a matter of league table win rather than fees. It is a prestige battle for banks to be on the mandate to raise money for the largest bank in India, which is a rare occasion,' said one of the persons cited above. Also Read: HDB Financial Services IPO: Should you subscribe? Here's what brokerages say Live Events The last time banks charged a similar fee for a large transaction was SBI's last QIP in 2017. SBI had then raised Rs 15,000 crore by selling 522 million shares through the QIP in June 2017. "This is a prestigious mandate, so bidding was aggressive. One of the merchant bank's quoted a Rs 1 fee and everyone else had to come to that level," said this person cited above. The bank's board had approved the QIP on May 3. If the bank raises Rs 25,000 crore, it will be the largest share sale through a QIP in India. A QIP is a faster alternative to a rights issue or follow-on public offerings such money is raised in bulk from large institutional investors . 'The bank wants to augment its CET 1 ratio which is the lowest among public sector banks. Growth wise the bank is well placed with the RoE of 19% is much ahead of the 12% loan growth. But capital can now be raised to cushion the CET which is the plan,' said one of the people. Also Read: These 10 multibagger penny stocks surged 200-570% in last 1 year. Do you own any? The bank is likely to hit the market in the next couple of months. As in the previous QIP when Life Insurance Corporation bid for half the size, this time too, the insurance company is likely to bid for a substantial portion of the equity. LIC has a 9.38 percent stake in the bank as of March 31, and is the largest shareholder in the bank after the central government that owns 57.43 percent. A final call on the timing and the size will be decided by the bank based on the market conditions. SBI shares ended at Rs 800 a piece on the BSE up 1% from Tuesday's close. This fiscal SBI will also receive money from the sale of a 13.19% stake in Yes Bank to Japanese lender Sumitomo Mitsui Banking Corporation (SMBC). It also holds a 5.19% in National Stock Exchange which will yield it a substantial sum whenever the stock exchange lists. ( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
India Today
18-06-2025
- Business
- India Today
Explained: Why IndusInd Bank shares rose 6% today
Shares of IndusInd Bank surged by nearly 6% on Wednesday, reaching Rs 853.65 per share during the trading sharp rise came after global brokerage firm Nomura upgraded its rating on the stock to 'buy' and increased the target price to Rs 1,050 from Rs 700. This new target price indicates a possible upside of 25% from the current the last year, IndusInd Bank's stock had fallen by 43.51%. However, it has shown signs of recovery in recent weeks, rising around 8.63% in the past month. Over a longer period, the stock has delivered a gain of 76.11% in the last five years and has increased by 3,754.07% since it was listed on the stock POSITIVE OUTLOOKAnalysts at Nomura believe that most of the bank's old problems have now been addressed. They expect the bank's return on assets (RoA) to reach 1% by the financial year 2027. The brokerage also said that IndusInd Bank's stock is currently trading at 0.9 times its one-year forward book value per share (BVPS), which they consider to be also noted that the bank's board seems committed to better governance. A leadership change is expected in the financial year 2026, which may help steer the bank in a new Reserve Bank of India (RBI) has recognised the bank's efforts to improve, which adds some regulatory comfort for investors. There is also a possibility that RBI may approve a promoter stake hike, which could reduce concerns among ISSUES AND RECOVERY EFFORTSIn recent months, IndusInd Bank has faced challenges due to governance and accounting-related issues. However, the bank has taken steps to fix these problems. This includes cleaning up its loan book and setting aside one-time provisions to deal with past compared IndusInd Bank's situation to that of RBL Bank in 2021 and Yes Bank in 2018. Both banks went through similar leadership changes when concerns about asset quality were raised. While their short-term performance was weak at the time, they later saw a recovery once their financial position became strongerDespite recent troubles, Nomura pointed out that IndusInd Bank's capital and liquidity levels remain strong. The bank has a Common Equity Tier-1 (CET-1) ratio of 15.1% and a liquidity coverage ratio (LCR) of 118%. These numbers suggest the bank has a good buffer in case of financial stress. The brokerage also highlighted the bank's strong presence in the retail market, which may help it recover profitability EARNINGS FORECASTNomura has raised its earnings per share (EPS) estimates for IndusInd Bank by 14% to 16% for the financial years 2027 and 2028. This upgrade is based on higher expected net interest income (NII) and lower credit to the new estimates, the bank's RoA could range from 0.8% to 1.1%, while return on equity (RoE) is expected to be between 7% and 10% for the period between FY26 and market responded positively to Nomura's upgrade and new projections, leading to a 5% rise in the stock price. advertisement
Business Standard
16-06-2025
- Business
- Business Standard
Moody's Ratings upgrades ratings of Yes Bank 'Ba2' with 'stable' outlook
Yes Bank said that Moody's Ratings has upgraded the bank's long-term (LT) foreign currency (FC) and local currency (LC) bank deposit ratings to 'Ba2' from 'Ba3'. The agency has also upgraded the banks baseline credit assessment (BCA) to 'ba3 from 'b1. It has changed the rating outlooks to stable from positive. Moody's Ratings said that the upgrade of Yes Bank's ratings and BCA is driven by a gradual improvement in the bank's credit profile including its capital and loan loss reserves which will provide sufficient buffers against the bank's unseasoned asset risks and improving yet modest profitability and funding. Yes Bank's Ba2 deposit ratings are one notch above its ba3 BCA based on our expectation of a moderate likelihood of support from the Government of India (Baa3 stable) in times of need. The bank's gross non-performing loan (NPL) ratio declined to 1.6% as of March 2025 from 13.9% in March 2022. Reported provision coverage as a proportion of NPL increased to 80% from 71% during this period. Despite these improvements, Yes Bank's asset quality remains exposed to unseasoned risks associated with the rapid expansion in its retail and small & medium enterprise portfolios, its increased focus into higher-risk retail segments, and reliance on third-party sourcing channels. The bank's Common Equity Tier-1 (CET-1) capital ratio on a standalone basis improved to 13.5% as of the end of March 2025 from 12.2% a year earlier following the exercise of equity share warrants during the year. In May 2025 Sumitomo Mitsui Banking Corporation (SMBC) announced that it will acquire a 20% stake in Yes Bank from existing shareholders. The planned acquisition is credit positive for Yes Bank because it brings in a long-term strategic partner, with a strong balance sheet and funding capacity to support its growth. However, with a 20% stake, we expect that SMBC's influence will be limited and consequently we do not plan to factor in affiliate support in the bank's rating after completion of the transaction. The bank's efforts to reduce deposit costs and increasing lending to higher yielding, albeit higher-risk retail and small and medium enterprise segments and will help maintain its net interest margins despite the significant decline in policy rates in India over the past few months. Continued improvement in the bank's ability to meet the central bank's priority sector lending norms will also support its profitability. Yes Bank's profitability is weaker than Indian peers we rate and remains the banks' key credit challenge. The bank's funding has gradually improved with higher share of low cost current and savings deposits and retail term deposits which increased to 51% of its total deposits at the end of March 2025 from 41% as of the end of March 2021. Yes Bank is private sector bank that is headquartered in Mumbai. The bank had reported consolidated assets of Rs 4,24,100 crore as of 31 March 2025. The scrip rose 0.20% to currently trade at Rs 20.20 on the BSE.
The Sun
28-05-2025
- Business
- The Sun
RHB posts RM750m first-quarter net profit
KUALA LUMPUR: RHB Bank Bhd registered a net profit of RM750 million in the first quarter of its financial year ending Dec 31, 2025 (Q1'25), an increase of 2.7% from the previous corresponding period. This was primarily attributed to higher net fund-based income and improved credit cost management, reflecting the group's disciplined risk management and strong base. Total income stood at RM2 billion, a marginal dip of 1.9% Y-o-Y mainly from contraction in non-fund based income due to lower net gain on forex and derivatives, and net trading and investment income. The group maintained operational stability, supported by prudent cost management, continued strength in capital and liquidity positions. Cost growth was contained at 1.2% whilst CIR stood at 47.4% from 45.9% a year ago, reflecting the marginal contraction in income. RHB Banking Group managing director/group CEO Datuk Mohd Rashid Mohamad remarked, 'We sustained our earnings growth momentum in the first quarter, underpinned by solid fundamentals and early traction from our PROGRESS27 strategy. Our cost optimisation efforts are beginning to deliver results, enabling us to contain expenses while driving growth in key segments. At the same time, our continued focus on asset quality has led to a reduction in credit cost. We remained disciplined in execution, strengthening our core capabilities, driving operational excellence, and unlocking new growth opportunities.' The group's total assets rose to RM353 billion, supported by healthy balance sheet growth and prudent capital management. At group level, the shareholders' equity stood at RM32 billion, with the Common Equity Tier-1 (CET-1) ratio of 16% and Total Capital Ratio (TCR) at 18.5%, reinforcing a strong capital position to support future growth ambitions, as well as to cushion macroeconomic uncertainties. Whereas the bank's CET-1 and TCR stood at 14.7% and 17.4%, respectively. Loan loss coverage ratio including regulatory reserves, improved to 115.7%, reflecting sound provisioning practices. Domestic loan growth of 4.7% (annualised) outpaced the industry's 4.3%, while the group's GIL ratio remained well-contained at 1.5%, and the domestic GIL ratio was below the industry average, demonstrating sound credit quality. The group remains cautious amid shifting rates and global trade uncertainty. The recent reduction in Statutory Reserve Requirement by Bank Negara Malaysia is expected to provide funding flexibility in the quarters ahead. 'Our new 3-year strategic roadmap, PROGRESS27, sets a clear course towards becoming the best in service, enhancing profitability, and reinforcing our purpose-driven commitment. With focused execution priorities, from simplifying customer journeys to advancing our sustainability ambitions, we are well-positioned to deliver near-term value while unlocking long-term value for all stakeholders,' said Mohd Rashid.
