April 26, 2017 at 12:58PM
from Tara Cunningham
Mahindra Finance: down but not out
In its interaction with analysts, the company’s management explained that while fewer new loans are becoming delinquent, old borrowers labelled NPAs are still not able to service their debt. Photo: Bloomberg. The signs are there of rural India limping …
April 26, 2017 at 12:41PM
LONDON — Credit Suisse on Wednesday said it would raise around CHF4 billion (£3.1 billion, $4 billion) by offering new shares to investors. It is halting plans to list part of its Swiss unit on the stock exchange.
Switzerland’s second-largest bank said in a statement on Wednesday that it has “decided not to pursue a partial initial public offering of our Swiss banking subsidiary Credit Suisse (Schweiz) AG, thus retaining full ownership of a historically stable income stream in our home market of Switzerland and avoiding complexity in the business structure and activities of a key division of the Group.”
The move allows the lender to strengthen its capital ratio while maintaining control of a profitable unit. At the same time, Credit Suisse’s share price has recovered from lows hit last year, making the offer of fresh equity more attractive.
“Through the proposed share capital increase, Credit Suisse Group AG intends to strengthen its Common Equity Tier 1 (CET1) capital and gain greater financial flexibility for the implementation of its strategic objectives,” the bank said.
A bank’s capital ratio is a measure of its financial strength and ability to weather losses.
“We expect the capital increase will strengthen our pro forma look-through CET1 ratio to approximately 13.4% and our pro forma look-through tier 1 leverage ratio to approximately 5.1%, based on our end-1Q17 risk-weighted assets and leverage exposures,” Credit Suisse said.
Raising capital to deal with increased global uncertainty and tougher regulations has been part of CEO Tidjane Thiam’s plan since he took over in 2015. He has overhauled the bank’s business model, steering away from the capital-intensive markets business towards providing more services for high-net-worth individuals.
In an interview with Bloomberg News last year, Thiam said: “You cannot see the future, that is a futile activity. What you can do is think through how you’re going to cope with a range of futures and then you define a risk appetite – which is what probably of death are you comfortable with.”
“In life, you should only worry about the bad outcomes. If you raise capital and you’re wrong, it’s ok. If you don’t raise capital and you’re wrong, you die,” he said.
Here’s the chart showing Credit Suisse’s recent share price recovery:At the end of last year, Credit Suisse was hit with a $5.3 billion bill to settle a US Department of Justice investigation into the behaviour of its residential mortgages division leading up to the 2008 financial crisis, pushing the lender to a loss for the year.
In the quarter the settlement was announced, Credit Suisse reported a capital ratio of 11.6%, down from 12.5% before the DOJ settlement but higher than the 10.2% ratio when the bank’s new strategy began in October 2015.
April 26, 2017 at 12:40PM
from Ben Moshinsky
LONDON — Online fashion retailer Boohoo announced surging revenue and profits on Wednesday, as it published its full-year results.
The Manchester-based company published these figures for the year end February 28, 2017:
Revenue growth is slightly above what the market was expecting, despite several forecast upgrades from the retailer in the year.
Boohoo’s UK sales jumped 33%, while European sales rose 50%, and USA sales surged 140%. The retailer, which primarily targets young women, now has 5.2 million customers.
The company’s joint CEOs and cofounders, Mahmud Kamani and Carol Kane, call it a “momentous year” in a joint statement. They said:
“The boohoo brand has achieved outstanding revenue growth and increased profitability margins during the year. We continued to grow strongly in the UK, our largest market, whilst international growth exceeded our expectations, particularly in the USA. Our customer proposition is proving consistently appealing.”
Kamani and Kane also flag the importance of recent acquisitions: the retailer acquired a majority stake in rival PrettyLittleThings at the start of the year and bought US retailer Nasty Gal out of bankruptcy earlier this year.
The CEOs said: “Both brands have huge potential and the acquisitions represent a step change in the size, structure and operation of the group.”
Not only has Boohoo recorded storming growth in the last year, the company are expecting the performance to continue, thanks in part to the deals. Kamani and Kane expect revenue growth of 50% again next year. They add that it has been “a promising start” to the 2018 financial year so far.
Jefferies, Boohoo’s house broker, said in a note on Wednesday morning:
“Despite a further slowdown in the boohoo brand’s UK sales growth to 25% in the final 2 months of FY17, and arguably modest guidance of 25% in the core boohoo brand for FY18E, the early stage growth of PrettyLittleThing and Nasty Gal in addition to promising initiatives in the core boohoo business make for an exciting investment story.”
Despite the strong numbers and the solid guidance for the year ahead, Boohoo shares are falling on Wednesday morning. The stock is down close to 3% after close to 15 minutes of trade in London:The slump seems to illustrate a saying among stock investors: “it’s better to travel than to arrive.” Boohoo’s shares have risen over 50% over the last 6 months and rallied strongly ahead of Wednesday’s results. The slump may well be down to investors banking gains after a solid set of numbers.
Like ASOS, Boohoo is one of the UK’s online fashion success stories. Founded in 2006, the company specialises in offering fashionable clothes for women at cheap prices and has a very quick turn around time from design to production, meaning it can keep on top of the latest trends. 70% of Boohoo’s traffic comes from mobile apps.
April 26, 2017 at 12:40PM
from Oscar Williams-Grut