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A curious crisis: UBI saga baffles analysts 

March 6, 2014
Business Standard

The crisis at Kolkata-based lender United Bank of India (UBI) appears to have baffled analysts, as there were no red flags that could have warned investors of the stress in the lender’s portfolio.

The public sector bank (PSB) is struggling with mounting losses, deteriorating asset quality and low capital adequacy ratio. With a massive rise in bad loans over the last two quarters, its capital adequacy ratio declined to 9.01 per cent according to Basel-III norms.

Three analysts — Anish Tawakley, Jatin Mamtani and Sumit Jain — with Barclays, wrote in a recent note to clients: “Identifying the red flags, of course, could serve as a useful screening tool for investors. Surprisingly, UBI’s credit growth rate, lending yield, Casa  (current account savings account) ratio and stressed sector exposure did not provide any adverse signals. In fact, its Casa ratio is among the best among public sector banks and on lending yields it is at the lower end of the range.”

Read more: Business Standard

 
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