Are Banking Stocks bad investment?

Are Banking Stocks bad investment? 1

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Few year ago, banking stock (class A) were labeled as safe investment, even for long term. However, it seems banking stock has been bad for trading as well as bad for holding, consiering the return. Some banks have stopped giving dividend and ADBL’s EPS is already negative. The return has been diminishing YOY.

Comparatively, Hydro’s dividend have been similar to most banks and has been able to give good return. HDL can be called a multi-bagger and has been a excelled stock for trading + long term investment + dividend.

Can big meger be last saving grace for banking ?

View on r/NepalStock by captainright1

Comments

4 responses to “Are Banking Stocks bad investment?”

  1. shrinkshrinkshrink Avatar
    shrinkshrinkshrink

    I would say yes but they’re good for hedging your risky stocks. I like NICA and SCB because they are making smart decisions. Other banks will keep depleting since NRB has put pressure on banks to reduce their interest rate spread below 4 and also these banks were heavily affected due to NRB converting CCD ratio to CD ratio only. This also brought the credit crisis in Nepal and resulted in interest rate increase. There is also very high competition and due to the banking cartel which is NBA, banks can’t innovate as much as they want.

    After a few years I see banks will keep on merging because there will be increased regulatory pressure which most banks won’t be able to handle and bad for business. Also NRB is putting pressure to separate business person from bankers as promoters.

    Reply
  2. berojgar_keto Avatar
    berojgar_keto

    hydros are not effected by a economic recession….banks and financial institutions are…. of course during a economic downturn banks will look bad for investment

    Edit: And remember hydro’s returns are fixed ..they have no potential for future growth….banks on the other hand have unlimited future potential…… investments are based on future growth…..

    Reply
  3. Asfen Avatar
    Asfen

    For investing look for anything with P/E below 20 and EPS above 15 while they have good book value/reserve so you can trust they can continue the profitable run.

    Commercial Banks has been really good investment option and will stay such for long time in my opinion. Central bank oversight has became stringent which can lower profit but will make the sector more stable.

    If I were investing I would keep atleast 60% of my portfolio in this sector.

    Reply
  4. FinalSurgeOfDopamine Avatar
    FinalSurgeOfDopamine

    They aren’t bad. They are safe and sound 10-15% return pa investment on the long run (or better depending on the bank). Don’t base your judgement on last couple years.

    Just because the market is behaving erratically doesn’t make Hydropower a good business. Most Hydropower are at an immense loss and their fate isn’t changing anytime soon. Market price is not indicative of the intrinsic value of the company specially in our market as we can’t short stocks here.

    Sure you can hold some shit Hydros and hope some big player pumps up your shit stock or do some short time scale trading. But that is speculation and you should know about the risks involved.

    Reply

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