12-07-2012, 12:43 PM
equity analysis for banking sector
EQUITY ANALYSIS FOR BANKING SECTOR.doc (Size: 608.5 KB / Downloads: 43)
INTRODUCTION
A major purpose of investment is to set a return or income on the funds invested. On a bond an investor expects to receive interest. On a stock, dividends may be anticipated. The investor may expect capital gains from some investments and rental income from house property return may take several forms the purpose of investment is to get a return or income on funds invested in different financial assets. The most important characteristics of financial assets are the size and variability of their feature returns. Since the return varies statistical techniques are used to measure it.
In accounting terms ownership equity is the remaining interest in all assets after all liabilities are paid. If valuations placed on assets do not exceed liabilities, negative equity exits. At the starting of a business , owner put some funding into business to finance assets business can be considered to be for accounting purpose sum of liabilities and assets .this is the accounting equation . After all liabilities have been accounted for the positive remainder is deemed the owner’s interest in the business .ownership equity is also known as risk capital, liabilities capital and equities. When the owners are share holders the interest can be called shareholder’s equity the basic equation is that total assets minus total liabilities equal to owner’s equity.
Return on Equity (ROE, Return on average common equity, and return on net worth). A measure of how well a company used reinvested earnings to generate additional earnings, equal to a fiscal year's after-tax income (after preferred stock dividends but before common stock dividends) divided by book value, expressed as a percentage. It is used as a general indication of the company's efficiency; in other words, how much profit it is able to generate given the resources provided by its stockholders. Investors usually look for companies with returns on equity that are high and growing.
A sound risk management system is integral to an efficient clearing and settlement system. BSE introduced for the first time in India, risk containment measures that were common internationally but were absent from the Indian securities markets. Risk containment measures include capital adequacy requirements of members, monitoring of member performance and track record, stringent margin requirements, position limits etc.
Investment or investing is a term with several closely-related meanings in, finance and economics, related to saving or deferring consumption. Investing is the active redirection of resources: from being consumed today, to creating benefits in the future; the use of assets to earn income or profit.
An investment is the choice by the individual, after thorough analysis, to place or lend money in a vehicle (e.g. property, stock securities, bonds) that has sufficiently low risk and provides the possibility of generating returns over a period of time.[3] Placing or lending money in a vehicle that risks the loss of the principal sum or that has not been thoroughly analyzed is, by definition speculation, not investment.[4]
In the case of investment, rather than store the good produced or its money equivalent, the investor chooses to use that good either to create a durable consumer or producer good, or to lend the original saved good to another in exchange for either interest or a share of the profits.
Brand Values
Indiabulls is amongst the largest non-banking financial services companies in India and enjoys strong brand recognition and customer acceptance.
The company attributes its dominant position in the brokerage industry to the preferential status it enjoys with investors Coupled with its forays into various segments; the Group believes that the bulk of its brand story is yet to be written.
Indeed, when a case study on India’s youngest brands which have had a profound impact on the economy is crafted, Indiabulls will feature prominently in it.
Recent Developments
Several developments across its group companies have propelled Indiabulls forward and are expected to continue to power the rise of this conglomerate.
Indiabulls Financial Services Limited has recently signed a joint venture agreement with Sogecap, the insurance arm of Society General (SocGen) for its upcoming life insurance
Banking Sector in India
Since 1991, India has been engaged in banking sector reforms aimed at increasing the profitability and efficiency of the 27 public-sector banks that controlled about 90% of all deposits, assets and credit. There has been radical and perceptible transformation in the operational environment of the banking sector. However, these changes have been induced with a view to develop sound and efficient banking sector in India, at par with international banking standards and practices. The banking sector, which was one of the most protected sectors for five decades in the country and more precisely the public sector, banks were slowly exposed to deregulated environment in slow and phased manner. The information technology (IT) revolution is entirely changing the way banking business is done and has considerably widened the range of products and services as well as the demands and expectations of customers.
Liquid assets
Members are required to provide liquid assets which adequately cover various margins & base minimum capital requirements. Liquid assets of the member include their Initial membership deposits including the security deposits. Members may provide additional collateral deposit towards liquid assets, over and above their minimum membership deposit requirements the acceptable forms of capital towards liquid assets and the applicable hair cuts are listed below: