Today as part of our investor education initiative we are going to delve into the pointers that are essential while analyzing a bank’s results and also discuss what are the possible movement of this highly volatile stock :
Stock Name : Kotak Mahindra Bank
Stock is being somehow hanging on its yearly support level which can prove to be a good point of reversal for the stock. But moratorium demanded by banks for next 3 months to support Retail and MSME sector to prevent fall out might impact the banking sector. Overall stock is well positioned to absorb losses if any and is quoting a LCR of over 22 .
Kotak Q4 Results : Source : www.bseindia.com
Technical Setup for Kotak Bank ( Daily Charts )
Pointers to view when analyzing a bank :
Net Interest Income : Interest Earned – Interest Expense for the bank.
Gross and Net NPA Ratio : Gross NPAs – Provisions. Gross NPA Ratio is the ratio of total gross NPA to total advances (loans) of the bank. Net NPA to Advances (loans) Ratio is the ratio of Net NPA to advances. It is used as a measure of the overall quality of the bank’s loan book.
Provisions – Cash kept aside to manage / absorb projected losses in loan book .
CASA Ratio – CASA ratio of a bank is the ratio of deposits in current and saving accounts to total deposits. A higher CASA ratio indicates a lower cost of funds, because banks do not usually give any interests on current account deposits and the interest on saving accounts is usually very low 3-4%.