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FINANCIAL CHRONICLE™ » CORPORATE CHRONICLE™ » is NDB debenture issue coming???

is NDB debenture issue coming???

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1is NDB debenture issue coming??? Empty is NDB debenture issue coming??? Thu Feb 27, 2020 2:31 pm

ThilinaM

ThilinaM
Vice President - Equity Analytics
Vice President - Equity Analytics
???? this is stealing from us and giving to loan providers.

2is NDB debenture issue coming??? Empty Re: is NDB debenture issue coming??? Thu Feb 27, 2020 4:08 pm

kasun_gimhana

kasun_gimhana
Manager - Equity Analytics
Manager - Equity Analytics
Then be a loan provider. It is simple as that no need to shout out loud.

3is NDB debenture issue coming??? Empty Re: is NDB debenture issue coming??? Thu Feb 27, 2020 4:22 pm

ThilinaM

ThilinaM
Vice President - Equity Analytics
Vice President - Equity Analytics
can be satisfied with 13.95% return

4is NDB debenture issue coming??? Empty Re: is NDB debenture issue coming??? Thu Feb 27, 2020 4:30 pm

kasun_gimhana

kasun_gimhana
Manager - Equity Analytics
Manager - Equity Analytics
no cant. I'm expecting at least more than 14.5%. but you no need to worry. you said the return on asset is 10% but calculate return on equity it is more than 13.95%. The entire asset base is not financed by equity and debt holders. a lot of assets are financed by bank depositors. As an equity holder, you will not lose anything due to debenture.

5is NDB debenture issue coming??? Empty Re: is NDB debenture issue coming??? Thu Feb 27, 2020 4:34 pm

ThilinaM

ThilinaM
Vice President - Equity Analytics
Vice President - Equity Analytics
ROA 10% means new cash inflow only can give you 10%.debenture rate 14% and investing in low yield such as 10% mean net loss to equity holders. return on equity not matter in this case.

6is NDB debenture issue coming??? Empty Re: is NDB debenture issue coming??? Thu Feb 27, 2020 7:25 pm

kasun_gimhana

kasun_gimhana
Manager - Equity Analytics
Manager - Equity Analytics
Yes @ThilinaM you are theoretically correct for all normal companies, But according to my knowledge and experience, for the bank, it will change. You know banks need to have long term capital in their balance sheet in order to give more and more loans and advances and as far as I know for the Basel 3 too. 
When they issue debenture they increase their ability to give loans and advance also. Because even a bank has more depositors money they cant use them as they wish.
so if a bank has a high return on equity than assets after the debenture issue you cant recognize the big negative impact on the ROE.

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