Espirito Santo Securities has reduced FY13 estimates but retains bullish FY14 views. It also finds asset quality has deteriorated while CASA ratio has improved along with growth
Espirito Santo Securities (ESS) feels that Federal Bank, the Kerala-based regional bank with a strong management team, will face difficulties till March 2013 but is bullish over the longer term—till March 2014. It has It has said that the bank is worth Rs601 per share, or 1.4 times the projected book value. The report said, “While we reduce our FY13 estimates by 10%, our FY14 estimates have broadly remained stable”. Federal Bank reported 4% increased net profit to Rs210 crore for the December quarter, which was 13% below ESS’s estimates.
One of the main reasons for the downgrade was the deterioration of the bank’s asset quality, in terms of ‘slippages’ and quality of the loan book. ESS found out that as much as Rs2.15 billion (Rs215 crore), and that too was from a single creditor—NAFED. The bank restructured its loan book to the tune of Rs217 crore in the third quarter alone. Earlier, ESS had expected a far bigger number—Rs350 crore. Further, incremental ‘slippages’ were recorded at Rs136 crore, which is marginally lower than Rs147 crore in the September quarter. Net non-performing assets (NNPAs) increased by as much as 48% on a quarter-to-quarter basis. This suggests that the bank will need to do something extraordinary to stem the rot even though some loans were recovered.
As of third quarter ended December 2012, the 31% of the loan book was in the retail segment while the SME segment also contributed to 31% of the loan book. The remainder was taken up by the corporate sector.
The high growth was driven by retail and small & medium enterprises (SMEs) segments, two of the key segments for any bank. Retail advances grew by 23.6% year-on-year (y-o-y), surprisingly most were gold loans! On the other hand, the SMEs segment saw a solid 29% y-o-y growth rate and up 22.7% in the corresponding period last year.
As far as liabilities are concerned, the bank’s CASA ratio improved to 29.5%, mostly driven by more customers opening and depositing more money in their savings account. The bank did this without increasing the savings rate, according to ESS, which is an impressive feat. Current Account-Savings Account (CASA), is a ratio that measures the relationship between current accounts and savings account. If there are more current accounts, the bank will benefit as costs for current account is virtually nothing, whereas Federal Bank has to pay interests on savings accounts. It is used to measure cost of funds.
Despite higher slippages and asset deterioration worries, ESS feels that Federal Bank will do fine. It said, “Federal Bank has started to see the results of its transformation efforts and investments in the franchise over the past two years is started to yield results”. However optimistic this sounds, investors must also keep an eye on the asset books given that 2013 will be a difficult year and dependant on many external factors.
Medical literature is like a thick jungle with 7.5 % new information pouring into biology through well over 40,000 bio-medical journals all over the world, every month. It is the job of an ideal teacher to guide the novice in this thick jungle of mostly dead wood to the real useful rose wood or the teak for his/her benefit
“Of several remedies, the physician should choose the least sensational”—Hippocrates
Has biology, the mother of modern medicine, found its Holy Grail, leave alone drinking from it? As a medical student at the Stanley Medical College, Madras, I got the impression that what I was taught was the whole truth and nothing but the truth. That was a long time ago, in fact, in the last century, to be precise in 1956 AD. Since then a lot of water has flowed down the Cooam Bridge on the Marina Beach. Unfortunately, nothing much has changed in our thinking in the medical field in the last half a century although lots of new technology, which I did not even hear about during my student days, have come into the picture and some of them have been since abandoned as they produced more suffering in their wake compared to the relief that they gave. Lot more new drugs have come and gone and are making media news almost everyday of a breakthrough or of a life-saving drug.
Shaken to my bones by some of the events in my medical life since then, I have tried to unlearn what I had learnt as an examination going student, almost for a decade from the time I entered medical school, only to relearn the realities in the field sans the claptrap. It has not been an easy task, an uphill task at that, at great risk to my career even. But now after more than half a century I feel it has been time well spent. I deem it my duty to share my arduous journey with the newer breed of doctors, trained in the present five-star, hi-tech atmosphere under the glare of an array of scopes and scanners and breath-taking heroic (the hapless patient as the hero) surgical feats. I would like to share my joys and sorrows with them lest they should also go through the same process that I went through and waste their time.
Medical literature today is like a thick jungle, what with 7.5 % new information pouring into biology through, well over forty thousand bio-medical journals all over the world, every month. The novice would find it difficult to separate the wheat from the chaff. In fact, it is the job of an ideal teacher to guide the novice in this thick jungle of mostly dead wood to the real useful rose wood or the teak for his/her benefit. Otherwise, the novice would not reach the real stuff and might get lost in the jungle for ever. David Eddy, a former professor of cardiovascular surgery at the Stanford, changed his profession after having gone deep into the realities (or otherwise) of medical science and trained to be a mathematics teacher at the Dukes University after his Ph.D in mathematics! I did not do that as I found it difficult to study advanced mathematics. I tried to swim along and see how we could change things if we can or bear with things that need no change and also to have the wisdom to know the difference. I do not know if I have reached my goal and that is why I consider myself a medical student even today.
Human body does not follow the linear rules of conventional mathematics and time evolution in man depends on the whole man (his genes, phenotype as well as his consciousness) and not on a few parameters of the phenotype. This is where our predicting man’s (patient’s) future rarely comes true. We have been predicting the unpredictable and intervening unnecessarily in apparently healthy people. This is precisely the reason for death and disability rates to plummet in Israel recently when doctors struck work for three months. Similar experience was reported from Saskatchewan in Canada twenty years ago and from Los Angeles country ten years ago when doctors went on strike. There has been hardly any difference in the per capita deaths due to chronic myeloid leukemia at the Christy’s Hospital, Manchester, during the two time slots, 1900-1940 and 1950-1990, although there were sea changes in our approach during the latter period.
The basic tenet to understand is that our body cells, of which there are about one hundred thousand billion in all, love one another so much that they would like to work as one whole. Even the cells of all sentient beings do the same. But for evolution (nature) developing the most powerful immune system all living things (humans included) would have been one large mass of a cell syncitium. Thank God for that. With that background in view, our organ based specialties and therapeutic measures would have to have problems on a long-term basis. While modern medical quick fixes could be useful in an emergency, they would come to grief on long-term use.
Another bane of modern medical thinking is the definition of normality, which, in fact, is only averages. In a bell shaped Gaussian graph of any measure in the human system, normal human beings are those who fall within the mean+- two SD (standard deviations). This automatically brings in the issue of false positives. In every parameter thus measured, 5% of normal population would, per force, be declared abnormal (false positives). This 5% suffers the long term consequences of our interventions, anyway. Be that as it may, now with the new Total Body Scanner, threatening to invade India in a big way in the near future, one shudders to think of the future of Indians. Total body scanners would measure five-hundred body parameters in one sitting. Now think of the mind-boggling 5% of the five hundred measures making a total of 2500 false positive measures for every one hundred people that go for a routine screening!
Any one that sees the doctor for a check up when apparently healthy, after the TBS, would have, on an average, 2.5 abnormal reports. There will be no NORMAL HUMAN BEING AT ALL. Although it is a very good business proposition, it is bad for mankind. Even at the present day it takes one thousand healthy women to be screened for cervical smear for forty long years to save one woman from cancer cervix! A sizeable percentage of those women would have lost their organs for no fault of theirs, as nearly 75 women in this group would have had abnormal smears with normal cervix and so on. Similar is the story of prostate, breast and many other cancers. The MRC study of mild-moderate hypertension showed that it takes 850 innocent normal people to be drugged for a period of five years to, probably, save one stroke.
So my suggestion to the new breed of doctors is to keep their eyes wide open before accepting all that comes from the west as gospel truth. Writing in his famous collage Against Method, and his book Farewell to reason, the famous science philosopher, Paul Feyerabend, has this to say about science in general and medical science in particular:
“It is true that western science now reigns supreme all over the globe; however, the reason was not insight in its “inherent rationality”, but power play (the colonizing nations imposed their ways of living) and the need for weapons: western science so far has created the most efficient instruments of death……First world science is one among the many; by claiming to be more it ceases to be an instrument of research and turns into a political pressure group.”
How very true? Please wait to find out how most of what we do in modern medicine belongs to the last group! Progress of knowledge should not be equated with killing of thinking minds and lead to “cultural murder.” Each culture, from time immemorial, had its own science and those need to be respected for the world to revive those sciences through rational research.
“At the end of times the merchants of the word will deceive the nations of the world through their Pharmacia”—(sorcery) - Rev 18:23
Click here to access other articles by Prof BM Hegde.
(Professor Dr BM Hegde, a Padma Bhushan awardee in 2010, is an MD, PhD, FRCP (London, Edinburgh, Glasgow & Dublin), FACC and FAMS. He is also Editor-in-Chief of the Journal of the Science of Healing Outcomes, Chairman of the State Health Society's Expert Committee, Govt of Bihar, Patna. He is former Vice Chancellor of Manipal University at Mangalore and former professor for Cardiology of the Middlesex Hospital Medical School, University of London.)
The unit-linked pension product is designed to protect the customer’s capital while attracting superior returns offered by equity as an asset class with the funds being invested in a combination of debt and equity
Gangtok: ICICI Prudential Life Insurance Company (ICICI Prudential Life) has announced the launch of “ICICI Pru Shubh Retirement”, a new policy for its clients throughout the country including Sikkim to address the growing need for post retirement income, reports PTI.
Stating this, Puneet Nanda, executive director, ICICI Prudential Life Insurance, told a gathering of ICICI clients, officials of the bank and other participants here that the Pension plan provides the comfort of capital guarantee and flexibility to customers to choose their investment strategy.
He said that this unit-linked pension product was designed to protect the customer’s capital while attracting superior returns offered by equity as an asset class with the funds being invested in a combination of debt and equity.
This pension product can be purchased by customers in the age bracket of 35 to 70 years. The maximum maturity age for this product is 80 years and the customers can choose a premium paying term of five or 10 years.
According to the ICICI officials, the scheme builds retirement corpus through equity participation, protects savings from market downturns through assured benefit, offers three investment options during the accumulation period and ensures assured income for whole of life and provides option to receive 1/3rd of the accumulated value on retirement as a tax-free lump sum amount.
This is the only pension product which offers consumers the flexibility to choose their investment strategy namely, Aggressive, Moderate and Conservative, with varying levels of equity participation based on their risk appetite, they said.
This would enable consumers to build a corpus during their working years and receive assured regular pension post retirement.