Having gone through many months of deep Lows, Banks in the CSE look like a good choice
Most big banks are poised to report solid earnings and their outlook for 2013 looks good aswell, especially with lower interest rates triggering more credit, improving interest margins, Economic growth, removal of credit limits by CBSL and also improving global outlook.
My Picks are SAMP, COMB, HNB, NTB in that order.
After going through research reports of many research huts and brokering units, these banks have a current expected PER between 7-9X and forward PER between 5.5-7.5X. Their forward PBV look attractive too.
Market conditions are expected to gradually improve and those expecting sudden 1000-2000 ASPI gains will be left behind.
Having looking at some gains already made in the last 6 months
NTB 44/- to 60/-
SAMP 148/- to 221/-
SEYB NV 22/- to 35/-
COMB and HNB have been stagnant and well poised for a move.
Drawbacks in the current scenario
The only risk i see is sudden introduction of government taxes for banks to clear Govt losses which is a risk possible with the current economic and financial handlers! They tend to burn the ones who do well in trying conditions. One good example was extremely heavy handed massacre of the automobile industry to cover up the losses made due to energy price manipulations and CBSL Dollar blunder! The goose laying the golden eggs is usually salughtered
a crippling tax increase was imposed on bulk tea exports, by a gazette notification on January 23rd. According to the Tea Exporters Association, the Ministry of Plantation Industries and the Sri Lanka Tea Board knew nothing of the tax-hike until informed by horrified tea-exporters!
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