HDFC Bank’s market cap now 10 times higher than that of crisis-hit Credit Suisse

The market cap of HDFC Bank is now 10 times higher than that of crisis-hit Credit Suisse after the latter’s stock price crashed amid speculation about its financial health. The market cap of HDFC Bank is six times higher than that of Deutsche Bank.

Currently, HDFC Bank’s m-cap stands at $99.10 billion while Credit Suisse’s m-cap is at $11 billion. A year ago, Credit Suisse had a market cap of $26 billion.

Deutsche Bank’s m-cap is at $15 billion. Last year its m-cap was at $26 billion. Both Credit Suisse and Deutsche Bank have declined nearly 58 percent and 40 percent in the last one year.

Many Indian banks like State Bank of India, ICICI Bank, Axis Bank and Indusind Bank now have higher market capitalisation than Credit Suisse and Deutsche Bank.

State Bank of India has an m-cap of $58 billion while ICICI Bank’s m-cap stands at $74 billion. Kotak Mahindra Bank’s m-cap is $44 billion. Axis Bank’s m-cap is $28 billion and Indusind Bank’s m-cap is $12 billion.

On Friday, new CEO of Credit Suisse Ulrich Koerner penned a memo to staff noting the strong capital base and liquidity position of the bank. Post this, its five-year senior CDS widened to 250bps.

Both Credit Suisse and Deutsche Bank shares have been under pressure since the beginning of the year. The shares are trading at valuations not seen since the 2008 financial crisis. In light of the troubles with gilt yields, investors feared that these investment banks would face big losses on their books, especially with leveraged finance, Moneycontrol reported.

Credit Suisse’s investment bank vertical has reported depressed earnings in the past quarters. Deutsche Bank faced immense pain in 2016 when the firm reported a big hit on its revenues, and its management had announced a restructuring plan wherein dividends were suspended, the Moneycontrol report said.

Meanwhile, brokerage firm CITI says ‘this is not 2008’. Citi believes Credit Suisse’s position is better than its peers. CS has a CET1 ratio of 13.5 percent, higher than its peers and LCR at 191 percent, which is the best in class; the liquidity position also remains healthy.