How to pick a Good Bank?
Banking is a very risky business where the inherent nature of the business is such that leverage is used to the extent of 5-10 times.
#Banking
Banking is a very risky business where the inherent nature of the business is such that leverage is used to the extent of 5-10 times.
#Banking
So it goes without saying that banks are expected to lend conservatively, do excellent underwriting and not miss the forest for the trees (meaning not missing balance sheet strength for just P&L. We all know of a bank who did things simply for P&L and ended up capital-starved).
4. Not missing the forest for the trees (meaning not missing balance sheet strength for just P&L )
Source - Q4FY19 concall
Source - Q4FY19 concall
7. Strong Liability Franchise
CASA (low cost deposits) represented 32% of Kotak Mahindra Bank& #39;s total deposits in FY12 which increased to 56.2% in FY20! This helped them to lower cost of funds and grow the bank!
CASA (low cost deposits) represented 32% of Kotak Mahindra Bank& #39;s total deposits in FY12 which increased to 56.2% in FY20! This helped them to lower cost of funds and grow the bank!
11. ALM (Asset Liability Management)
The bank should be very careful/diligent on its assets/liabilities management ( as well as the mismatch or the negative mismatch around it.)
Source - Q2FY19 concall
The bank should be very careful/diligent on its assets/liabilities management ( as well as the mismatch or the negative mismatch around it.)
Source - Q2FY19 concall
To conclude, Banks with strong underwriting practices and conservative managements will get stronger (Strong will get stronger). Also, Banks with high capital base (Tier 1 Ratio) will weather the storm relatively better.
Stocks mentioned above are not a recommendation.
End.
Stocks mentioned above are not a recommendation.
End.