Deepak Shenoy

Indian Banks Still Interesting

Indian banks must place at least 24% of their deposits into government securities. G-Sec yields have dropped about 200 basis points in the last quarter, and the bonds have gone up nearly 20% in price, in the quarter.

Treasury income is likely to be through the roof, but they can't book all of it (unless they've actually got the profit home by selling stock). They can use part of the mark-to-market profit to set up provisions for potential losses elsewhere (like equity etc.)

It's likely that HDB and IBN get some leeway on treasury which has been losing money the last couple quarters. Indian PSU banks, not listed in the US, are in much better shape and much lower in price. (relatively)