HDFC Bank will take over HDFC Ltd....effectively making a huge bank
25 shares of HDFC ltd will receive 42 shares of HDFC Bank.
(2/19)
HDFC Bank has announced a merger with HDFC Ltd
What does it mean for the banking system and the shareholders of both companies?
A thread🧵explaining the pros and cons of the merger.
Hit "Retweet" to educate maximum investors
Lets go👇
(1/19)
HDFC Bank will take over HDFC Ltd....effectively making a huge bank
25 shares of HDFC ltd will receive 42 shares of HDFC Bank.
(2/19)
HDFC Bank+HDFC total size=18 lakh crores
SBI total size=26.5 lakh crores
With steady loan growth over the next 5 years....surely HDFC Bank will become the largest bank
(3/19)
Over the past year ICICI scored big time on HDFC Bank due to rapid growth on home loans.
ICICI clocked up about 24% loan growth while HDFC Bank did not have a home loan portfolio.
(4/19)
The regulatory arbitrage b/w Banks and NBFCs is slipping away:-
The IL&FS crisis hit the economy really hard.
Since then the RBI has taken various steps in NBFCs:-
1. Asset classification norms for NBFCs have been moved at par with that of banks.
(5/19)
3. It is further expected that RBI may move to a CRR and SLR type regime for NBFCs as well.
(6/19)
Both HDFC and HDFC Bank are flushed with capital.
HDFC Banks has a TIER-1 CAR of 19.6%
HDFC Ltd has a TIER-1 CAR of 22.4%
Capital requirement is low at this stage...Therefore it makes sense to take on this merger
(7/19)
Over the last 3 years we have seen
1. IL&FS crisis
2. DHFL crisis
3. Drying up of builder funding
has led to NBFC crisis.
(8/19)
1. Low-Interest rates
2. End of builder consolidation that started since the IL&FS crisis
3. Sops given by various governments like stamp duty cuts
In fact HDFC ltd reported a 48% growth in the first 9 months of this year.
(9/19)
1. 70% of HDFC Bank customers do not have a home loan
2. 68% of HDFC ltd customer do not have a liability franchise with HDFC Bank
When all the products are offered under one basket...the value will be immense.
(10/19)
Currently, HDFC ltd raises funds at 5.8%
HDFC Bank raises funds at about 3.5-4%.
There will be massive savings on cost of funds as the merger properly takes shape
(11/19)
HDFC Ltd's current shareholding in HDFC Bank will automatically get canceled.
This means the whole pie of shareholding will contract which will result in
1. Increase in EPS
2.Increase in Book Value
3.Increase in CAR
(12/19)
Mr Keki Mistry was turning 67 and was due to retire by 70.
Renu Karnad is also 67 and due to retire.
Therefore it makes complete sense to merge HDFC ltd so that the succession planning is taken care of
(13/19)
HDFC ltd has about 5.25 lakh crores book.
On this book, CRR+SLR and statutory buffers have not been maintained.
This will require huge capital.
Since this a big amount the bank has written to the RBI to allow 2-3 years for this change
(14/19)
The loan book of both entities will now be 18 lakh crores.
The sheer challenge to maintain asset quality and growth on such a scale is massive.
(15/19)
HDFC Bank post-merger will hold a stake in
1. HDFC Life
2. HDFC AMC
3. Bandhan Bank
4.RBL Bank
5. HDFC Ergo
6.HDB Financial
7. HDFC Credila
The regulator must allow the bank to keep a stake in all these companies
(16/19)
So many regulators are involved in the process that chances of hitting a roadblock are high
(17/19)
More from Aditya Shah
SEBI cuts REIT lot size to 1 unit....this will boost the liquidity and encourage more participation!
REIT is like a mutual fund that invests in physical real estate assets!
Read more
REIT is like a mutual fund that invests in physical real estate assets!
Read more
Real Estate Investment Trusts (REITs) Simplified.
— JST Investments (@JstInvestments) June 9, 2021
A product that provides a fixed income that is better than FD +an upside like equity.
A Thread \U0001f9f5\U0001f447
What to do when u first save money?❓
Do u straight away invest in equities/shares?🤔
A simple thread🧵explaning how u can systematically create a structured portfolio on ur own.
Hit "Retweet" to educate maximum retail/small investors
Lets go👇
(1/14)
Step No 1.-
Golden Rule of Finance-
Expenses=Income-Saving
🧪In the starting years as an investor save as much as u can.
🧪Cut down as much as u can on discretionary spending.
🧪Initial years are tough as capital comes in slowly and seeds for compounding are being laid
(2/14)
Step No 2:-
Buy a health insurance:-
Health insurance will protect your portfolio against undue shocks of unforeseen hospitalization
A detailed review of how to buy health insurance is
Step No 3:-
Buy a Life Insurance(If required):-
Evaluate the need for life insurance.
If need be buy a term plan.
A detailed review of how to buy life insurance is
Step 4:-
Evaluate ur life goals
Goals can be:-
🧪Retirement
🧪Buying a house
🧪Child's Marriage
🧪Child's Education
Evaluate the year in which the goal will be achieved with the amount of estimated amount
(5/14)
Do u straight away invest in equities/shares?🤔
A simple thread🧵explaning how u can systematically create a structured portfolio on ur own.
Hit "Retweet" to educate maximum retail/small investors
Lets go👇
(1/14)
Step No 1.-
Golden Rule of Finance-
Expenses=Income-Saving
🧪In the starting years as an investor save as much as u can.
🧪Cut down as much as u can on discretionary spending.
🧪Initial years are tough as capital comes in slowly and seeds for compounding are being laid
(2/14)
Step No 2:-
Buy a health insurance:-
Health insurance will protect your portfolio against undue shocks of unforeseen hospitalization
A detailed review of how to buy health insurance is
As part of financial planning
— JST Investments (@JstInvestments) December 24, 2020
A thread on health insurance
What is health insurance?
Health insurance is a insurance that covers medical expenses that arise due to an illness. These expenses could be related to hospitalisation costs, cost of medicines etc.
1/
Step No 3:-
Buy a Life Insurance(If required):-
Evaluate the need for life insurance.
If need be buy a term plan.
A detailed review of how to buy life insurance is
Term Plan or a ULIP or a endowment plan?\U0001f914
— JST Investments (@JstInvestments) April 5, 2021
Life Insurance simplified:
Do 're-tweet' & help us educate more investors
A Thread \U0001f9f5\U0001f447
(1/15)
Step 4:-
Evaluate ur life goals
Goals can be:-
🧪Retirement
🧪Buying a house
🧪Child's Marriage
🧪Child's Education
Evaluate the year in which the goal will be achieved with the amount of estimated amount
(5/14)
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