August 20, 2018 / 5:53 AM / 3 months ago

BUZZ-Kerala floods will lead to losses, recovery delays for banks - Jefferies

** Jefferies says floods in India’s southwestern state of Kerala will lead to some recovery delays and losses for banks, typically in agriculture loans, micro, small and medium enterprises (MSME) priority sector loans, home loans and trade activities

** Incessant rains since Aug. 8 have caused Kerala’s worst floods in a century, and at least 186 people have perished, many of them killed by landslides

** Exposure of loans: 24 pct of exposure to agriculture, 16 pct to MSME, 11 pct to housing loans - Jefferies

** RBI regulations allow restructuring of loans in case of natural calamities but banks will need to make higher provisions with respect to restructured loans; expect RBI’s relaxation to defer non-performing loan spike in the near term - Jefferies

** Kerala advances as percentage of total advances is 41 pct for South Indian Bank Ltd and 36 pct for Federal Bank Ltd

** Federal Bank down as much as 6.4 pct, while South Indian Bank falls 3.8 pct

** Banks’ overall loan exposure to Kerala was 3 pct in FY 18 - Jefferies

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