InvestorQ : Why are the solid banks like HDFC Bank and Kotak Bank also taking a major hit in the markets? Is this some kind of panic selling?
Mitali Bhutta made post

Why are the solid banks like HDFC Bank and Kotak Bank also taking a major hit in the markets? Is this some kind of panic selling?

Answer
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Dawn Cherian answered.
5 months ago


While HDFC Bank has been falling for some time now since the Alliance Bernstein downgrade, Kotak Bank has started falling sharply after recent conference call. However, some analysts have been warning of a hit on revenues and growth for all banks. The sharp fall in these two banks in the recent past is a tad surprising considering that they have been held strong through the entire carnage. While HDFC Bank has sounded optimistic, Kotak Bank has been a lot more circumspect about the impact of the lockdown. Let us look at Kotak Bank first. It needs to protect its Rs.323,000 crore balance sheet. But, Kotak Bank also has a major exposure to real estate as well as to unsecured personal loans. In addition, the loans to commercial realty were 3.7% of its loan book while loan against property was 21%. All these are potential risk points. In the case of HDFC Bank, customers have been wary of the huge exposure it has to the retail lending book and its likely impact if the lockdown starts to result in retail defaults. Clearly both banks could remain under pressure.