Today's Banking / Financial News at a Glance 24.10.2020

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☕ 24.10.2020: Today's Banking / Financial News at a Glance

🍒 RBI’s first OMO purchase of state development loans sees good response : In a bid to sooth bond market concerns over large state borrowings in the second half of the fiscal, the RBI announced open market operations (OMO) purchase of State Development Loans (SDLs) for the first time, as a special case, in its October policy. The first auction of ₹10,000 crore of SDLs on October 22, not only received good response, but experts also believe that future auctions could help narrow the spreads between SDLs and equivalent government securities in certain tenures. Against the notified amount of ₹10,000 crore, RBI received bids to the tune of ₹15,475 crore, implying a bid-to-cover-ratio (amount of bids received relative to the amount announced) of 1.5:1 times. Top OMO purchases (by amount) included ₹1,505 crore of 7.78 per cent Maharashtra SDL 2029 at a cut-off yield of about 6.5 per cent, ₹1,199 crore of 7.17 per cent Karnataka SDL 2029 at again 6.5 per cent, ₹1,136 crore of 7.2 per cent Karnataka SDL 2029 at 6.47 per cent and ₹950 crore 7.18 per cent Gujarat SDL 2030 at 6.5 per cent. - Business Line

🍒 RBI board holds review meet to take stock of economic situation, other challenges : Amid the uncertainties created by the coronavirus pandemic, the Reserve Bank’s central board on Friday held a meeting to discuss, among other things, the economic situation and other challenges. The meeting, which was held through video conferencing, also deliberated on the issues concerning financial stability in the present context. "The board reviewed the current economic situation, continued global and domestic challenges and various areas of operations of the Reserve Bank. The board also discussed the working of sub-committees of the central board and the local boards and deliberated on the aspects related to financial stability in the present milieu,” the RBI said in a release. - moneycontrol.

🍒 RBI issues guidelines to set up self-regulatory organisation for PSOs : The Reserve Bank on Thursday issued final guidelines, including the framework, to set up a self-regulatory organisation for payment system operators as part of its payment and settlement systems vision. The framework will enable the central bank to recognise a self-regulatory organisation (SRO) for payment system operators (PSOs). The plan was announced in February 2020 monetary policy. "Interested groups/association of PSOs (banks as well as non-banks) seeking recognition to be an SRO may apply to the chief general manager, department of payment and settlement systems at the RBI," the regulatory circular said. An SRO is a non-governmental organisation that sets and enforces rules and standards relating to the conduct of its members to help protect customers and promote ethical and professional standards. - Business Standard

🍒 Punjab and Sind Bank reports account of IL&FS Financial Services (IFIN) as fraud account to RBI : Punjab and Sind Bank on Friday said it has reported to the Reserve Bank of India (RBI) the account of IL&FS Financial Services (IFIN) as fraud with outstanding dues of over Rs 561 crore. The NPA account, IL&FS Financial Services, with outstanding dues of Rs 561.13 crore has been declared as fraud and reported to the RBI as per the regulatory requirement, the bank said in a regulatory filing. "Further, the bank has already made 100 per cent provisioning as per the prescribed prudential norms and the account is technically written off," it added. The scam at the IL&FS group came to light in September 2018 after several group entities defaulted on repayments due to severe liquidity problems. Later, the government superseded the board of directors to revive the ailing group. - economic times

🍒 IDBI Bank posts ₹324-crore profit in Q2 : IDBI Bank reported a net profit of ₹324 crore in the second quarter ended September 30, 2020 against a net loss of ₹3,459 crore in the year ago period. Net profit in the reporting (Q2) quarter jumped 125 per cent vis-a-vis the preceding quarter’s ₹144 crore. The bottomline in Q2FY21 supported by a reversal in loan-loss provisions aggregating ₹165 crore. The bank had made loan-loss provisions aggregating ₹3,545 crore in the year ago quarter. Net interest income (difference between interest earned and interest expended) edged up 4 per cent year-on-year to ₹1,695 crore (₹1,631 crore). - Business Line

🍒 Mumbai Police to transfer 50,000 accounts to HDFC Bank : Mumbai Police is transferring 50,000 accounts of its staffers from Axis Bank to HDFC Bank. Sources close to the development confirmed that Mumbai Police has signed a memorandum of understanding with HDFC Bank earlier this week. “The terms being offered by HDFC Bank were seen to be better in terms of insurance coverage, interest rates, free debit and credit cards, ATM transactions and other benefits,” noted the source. - Business Line

🍒 YES Bank Q2 results: Private lender reports net profit of Rs 129 cr, provisions decline 11% YoY : Private lender YES Bank on Friday posted a net profit of Rs 129.37 crore for the quarter ended September 30 with some improvement in the asset quality. The bank had posted a loss of Rs 600.08 crore in the corresponding quarter last year. Net profit of the lender stood at Rs 45.44 crore in the preceding quarter ended June 30. Percentage of gross non-performing assets (NPA) stood at 16.30 per cent against 17.30 per cent on QoQ basis. Likewise, net NPA came at 4.71 per cent against 4.96 per cent. Provisions declined 11.10 per cent YoY to Rs 1,187 crore. However, the figure witnessed a rise of 9.3 per cent on QoQ basis. Net interest income (NII) de-grew 9.70 per cent YoY to Rs 1,973 crore, while non-interest income declined 25.30 per cent YoY to Rs 707 crore. - economic times

🍒 YES Bank shares climb 2% ahead of Q2 earnings : Shares of YES Bank climbed about 2 percent in morning trade on BSE on October 23 ahead of its September quarter earnings. The private sector lender is expected to report pressure on the revenue front. Kotak Institutional Equities expects YES Bank's outstanding loans to decline about 30 percent year-on-year (YoY) but the key positive would be the recovery in deposit mobilisation. Other than the numbers, management commentary on the progress of below investment grade and recovery from existing bad loans would be the key monitorable. Shares of YES Bank traded 1.34 percent higher at Rs 12.89 on BSE at 09:55 hours. - moneycontrol.

🍒 Federal Bank expects spurt in NPAs in next two quarters if economic conditions do not improve : Federal Bank has said it fears a higher-than-normal accretion of non-performing assets (NPA) over the next two quarters from loans to small businesses and retail borrowers if economic conditions do not improve. As against the usual rate of Rs 300-350 crore in fresh slippages per quarter, the number may go higher by over 30 per cent if the economy continues to be challenging, its managing director and chief executive Shyam Srinivasan told PTI. He said the Rs 300 crore slippage number is excluding the corporate advances and made it clear that there is no large chunk corporate loan which it feels may slip into NPA. - economic times

🍒 ICICI Lombard General registers 35% increase in Q2 profit : Private sector ICICI Lombard General Insurance reported a 35 per cent increase in net profit to ₹415.74 crore in the second quarter this fiscal from ₹307.91 crore a year ago. Its total income increased by 5.3 per cent to ₹2,883.4 crore in the quarter ended September 30, 2020, from ₹2,738.92 crore a year ago. Gross premiums written grew by 7.4 per cent on a year-on-year basis to ₹3,254.51 crore in the second quarter of the fiscal. “Solvency ratio was 2.74x at September 30, 2020, against 2.50x at June 30, 2020, and higher than the minimum regulatory requirement of 1.50x. Solvency ratio was 2.17x at March 31, 2020,” ICICI Lombard said in a statement on Friday. - Business Line

🍒 Disappointing Q2 net profit: SBI Card’s shares correct on asset-quality pressures : A sharp spike in bad loans in the second quarter of this fiscal, coupled with expectations of continued pressure on asset quality, pulled down SBI Card’s shares on Friday to close at ₹805 per share on the NSE. This was substantially down from the ₹911 high the stock had hit on October 21 and the close of ₹852 on Thursdaywhen the results were announced. However, Friday’s close of ₹805 was higher than the day’s low of ₹766.10, implying that there may have been some bottom fishing at those low levels, say analysts. - Business Line

🍒 SBI Card shares plunge 11% after the firm reports huge spike in bad loans in Q2 : Shares of SBI Cards and Payment Services plunged almost 11 percent in morning trade on BSE on October 23, a day after the company reported a huge spike in bad loans during the September quarter. SBI Card reported that its gross non-performing assets (NPAs) rose from 1.4 percent in the April-June quarter to 4.3 percent in Q2. - moneycontrol.com

🍒 Aditya Birla Fashion to raise ₹1,500 cr from Flipkart; shares surge over 6% : Aditya Birla Fashion and Retail Limited (ABFRL) has on Friday approved raising of ₹1,500 crore by way of the preferential issue to Flipkart Group. The equity capital will be raised at ₹205 per share. With this infusion, Flipkart Group will own 7.8% equity stake in ABFRL on a fully diluted basis. The promoter and promoter group companies of ABFRL will hold about 55.13% upon completion of the issuance. The partnership is likely to transform apparel commerce in India and enable ABFRL to emerge as a robust omnichannel player, the company said in a statement - Business Line

🍒 India's forex reserves touch life time high of $555.12 billion : he country’s foreign exchange reserves touched a life time high of $555.12 billion after it surged by $3.615 billion in the week ended October 16, according to RBI data. Inthe previous week ended October 9, 2020, the reserves had increased by $5.867 billion to reach $551.505 billion. During the latest reporting week, the rise in total reserves was due to a sharp rise in Foreign Currency Assets (FCAs), a major component of the overall reserves. FCA jumped by $3.539 billion to $512.322 billion, the data showed. - moneycontrol.

🍒 Gold gains for fourth straight week, silver falls to Rs 62,545 per kg ; Gold prices fell Rs 127 to Rs 51,223 per 10 gram in the Mumbai retail market despite weakness in the dollar. The precious metal gained Rs 318, or 0.62 percent this week, rising four straight weeks on the trot. The rate of 10 gram 18, 22 and 24-carat gold in Mumbai was Rs 38,417, Rs 46,920, and Rs 51,223, respectively, plus 3 percent GST. Silver prices declined Rs 234 to Rs 62,545 per kg from its closing on October 22.

🍒 Rupee ends 7 paise lower against US dollar : The rupee depreciated 7 paise to close at 73.61 (provisional) against the US dollar on Friday even as the domestic equity market was trading with significant gains. At the interbank forex market, the local unit opened weak at 73.62 against the US dollar and remained stressed for majority of the session before closing at 73.61, a loss of 7 paise over its previous close. During the session, the local unit witnessed an intra-day high of 73.46 and a low of 73.67 against the US dollar. It had settled at 73.54 against the greenback in the previous session on Thursday.

🍒 Sensex ends 127 points higher; Nifty reclaims 11,900-level : Equity benchmark Sensex ended 127 points higher on Friday, primarily led by gains in auto, metal and power sector stocks amid positive cues from global markets. After rising 252.63 points during the day, the 30-share Sensex settled 127.01 points or 0.31 per cent higher at 40,685.50, and the broader NSE Nifty rose 33.90 points or 0.28 per cent to end 11,930.35. On the Sensex, Maruti Suzuki was the top gainer, rallying around 4 per cent, followed by M&M, Tata Steel, PowerGrid, Bajaj Auto and NTPC. On the other hand, UltraTech Cement, HCL Tech, HUL and Bajaj Finserv were among the laggards..

… Have a Good day..