Search the Internet          Tips  Sites: Finance, Investment

GTB's peers to stay ahead in the retail race

NetScribes / Radha Ganesan

The Rs 227-million net loss that Global Trust Bank incurred in the March quarter is put in perspective when held up against those incurred by its peers - HDFC Bank and ICICI Bank (Rs 608 million and Rs 504 million, respectively). All the three banks have aggressively pursued a focus on the retail banking segment.

Despite the similarity in focus, analysts have stressed stock market crash as the main reason for GTB's losses.

"Due to the meltdown at the stock markets, the bank lost a huge sum in collateral funds," said Milind Muchala, analyst at Dalal & Broacha Securities. This pulled up the provisions and contingencies in the latest quarter to Rs 904 million from Rs 662 million in the previous corresponding quarter.

In the fourth quarter, interests earned on advances dipped to Rs 998 million (Rs 1,350 million). Interest expenditure, on the other hand, has zoomed to Rs 2,110 million (Rs 1,440 million).

"The interest margin is clearly under pressure and could be of concern in the coming fiscal too," said Manish Karwa, banking analyst at Pranav Securities.

GTB's earnings for FY01 shrunk by 26 per cent, mainly pulled down by the fourth quarter performance. The net profit stood at Rs 803 million, comparable with Rs 2.10 billion and Rs 1.61 billion recorded by HDFC Bank and ICICI Bank in the fiscal.

Going forward, analysts do not expect a healthy growth for GTB, as compared to above-average performances from HDFC Bank and ICICI Bank.

"The controversies the bank is currently surrounded with will reflect on their figures," said an analyst at HSBC Securities.

"The controversies will directly impact GTB's deposits in the current year," said Karwa. The bank's deposits grew by around 24 per cent to Rs 40.99 billion in FY01.

According to Karwa, the bank would concentrate more on provisioning for NPAs and better management of the balance sheet.

The GTB scrip price is expected to stay range-bound in the short term. "The scrip is already at a low and we do not see further downsides immediately," said Muchala.

Karwa felt that there could be some buying interest at Rs 30-35. However, this level is not expected to be reached any time soon.

Technical analysis indicated that after a recent minor bottom, the scrip could be in for a corrective rally. But an upside would be possible only after a weekly closing above the Rs 30 level.

Money

Business News

Tell us what you think of this report