| South Indian Bank-CAR 16% Is Second To ICICI Bank, and tops CAR of Axis, HDFC Bank and IndusInd Bank-conservative price target Rs 240-275
The Indian banks anyways meet most of the requirements and deductions of the Basel III norms. While the RBI has not prescribed any capital conservation buffer, the Indian banks always maintain tier I capital ratios in excess of 8%.
However, Indian banks can face three key issues with respect to Basel III norms:
n Being a growing economy, the credit growth may remain high for Indian banks whichmay prompt the RBI to implement the counter cyclical buffer and thereby raising the capital requirements for Indian banks. This may particularly affect the private sector banks.
n For few of the banks (marked in grey in following table), the tier I capital is very muchnear 8.5% with not very high government holding. These banks may face problems in raising capital in 2017-18 if there are no changes in policies. However, IPDI and PNCPS will help them raise non-core tier I capital.
n Few of the PSU banks like Corporation Bank and Andhra Bank still give good dividendyields. However, the requirement of higher tier I capital may restrict their dividend payout policy. Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints. Nothing in this article is, or should be construed as, investment advice. |
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