Profile – Bank of America

Recently I was working on preparing company profile for Bank of America.

During this assignment, I covered different business segements of Bank of America ,  its stock performance , merger and acquisition trends, Financial Analysis and Federal Bail Out to Bank of America in severe recessionary period of 2008-09.

The Primary source of information were Annual Reports filed by Bank of America, few good research websites and of course wikipedia.

The report is in Power Point Format. May be of use to you if you are looking for quick information on Bank of America. Send me a mail if you would like to have a look at the report (amit2.saxena at gmail dot com)

Top 10 Banks by Assets (2009)

About two months back when I had tried compiling a list of world’s top banks by asssets(with my friend Abhishek), the task was not easy. The main reasons being that full year results of all companies were not out. Also, all the firms don’t report their numbers in dollars using a point-in-time exchange rates . However, recently Forbes had published the list of world’s top 2000 companies. So now I know who stands where without much efforts . If we go by the Forbes numbers (which I believe should be correct), the top 10 companies in the whole world when put in the order of their balance sheet size are as follows:

Rank	Company	Country	Assets ($bil)
1	Royal Bank of Scotland	United Kingdom	3491
2	Barclays	United Kingdom	2948
3	Deutsche Bank	Germany	2947
4	BNP Paribas	France	2889
5	HSBC Holdings	United Kingdom	2520
6	JPMorgan Chase	United States	2175
7	Crédit Agricole	France	2064
8	Citigroup	United States	1939
9	Mitsubishi UFJ Financial	Japan	1931
10	UBS	Switzerland	1899

No surprise these are all banks or financial institutions. Banks have a slightly different way of accounting and the public deposits form a significant part of their assets. As a matter of fact in the top 50 companies only two companies, GE (ranked 28th) and Deutsche Post (ranked 49th), are outside the financial domain.

For the complete list of 2000 companies, please visit Forbes.
Source: Forbes, Google Finance, Reuters.

What is Credit Crisis?

Credit Crisis has become a buzz word in past couple of years. It seems as financial crisis has engrossed our lives. We find it everywhere from media to newspapers.

But the most important question is ‘How many of us understand what credit crisis is all about?‘. Ask to your friends and I think, most of them will not be able to give satisfying explanation. All you can hear from them is that its not going well in markets and people are losing jobs. Why? Nobody knows.

I was also among those asking why it is happening and trying to figure out nuances of financial crisis. By luck, I came across a person who helped me in understanding this phenomena precisely. I thought it will be good to spread the knowledge I gained from this gentleman.

This Person is Mr Khan who has published many videos on credit crisis in YouTube . There are few videos on banking system as well and they are quite helpful too.

If interested, please visit www.khanacademy.org. Once you open the website you see topic wise headings. Just click on the heading you are interested in and a video will automatically open in a seperate window.

His videos are so popular on Youtube that he was invited on CNN to share his knowledge and brief the viewers on the financial crisis.

Hope you will enjoy learning!! Do share these videos with your frieds if you find them useful.

CFA Level 1 – My Experience and Preparation Tips.

I gave CFA (US AIMR) in Dec 08 and after giving the paper I was looking for forums for comments from the exam takers. Strangely, I couldn’t find a single active fourm about the exam. I am not sure why was it so. Probably because CFA Institute has a strict policy of not discussing CFA Examination in Public Forums.

Anyways, this post is about the my CFA Level 1 experience and Prepration Tips. It all started with my desire to become a Equity Analyst tracking the markets and analyzing Industries. The first step towards gaining credibility in the market was working for CFA certification.

I enrolled 6 months before the exam date and received 6 bulky books from CFA institute. This took around 2 weeks    after my enrollment. I was suppose to rigerously study those books but in the middle of my preparation I lost track (Personal problems is always a good excuse, you know) and it happened that I couldn’t study at all for 3 months.

When I realised that I had to work hard it was too late. I mean, the material by CFA Institute was not the right thing to prepare from in the last couple of months. Neither could I roll back because there was no refund of fees ( You Know, CFA is a costly hobby, it costs 1078 dollars for level 1).

Fortunately, a good friend of mine told me to give a shot with schweser notes. These notes are supposed to be concise , to the point and formulated crak the paper, espically for late starters like me. I started referring to the notes and realized that my friend was quiet correrct. Still, I had just 1.5-2 months left and I was not able to devote more than 2 hours for prepration. My friend advised me to get basic understanding of the subjects (Financial Statement Analysis, Corporate Finance, Alternative Investments etc) and start working on mock papers (Subject Wise) because the more questions you practice the better it is.

That was the MasterShot. My friend send me 24 subject wise Mock Tests. I dont know where he got them from but that was really really helpful. I prepared using the Mock tests and I felt quite comfortable as the exam approched. I have attached the link for 24 Mock Papers and you can have a look at them as well( I am not sure if I am a violating any CopyRight Act, if I am, I will have to remove the link  soon).

Then came the Doomsday, The day of CFA Exam, 2 papers , 3 hours each .

Fortunately, I was in London for the exam . I guess all Fund Mangers and Investment Bankers are born in London. Why? Because around 6000 candidates appeared for the exam, I think the highest in any CFA center.

It was quite difficult for me to concentrate for 6 hours but at the end of it, I finally cleared the Paper.The bad thing is that One has to wait for 2 months to see the result.

Anyways, Still I am not sure of how to enter Investment Management Industry. God knows, where is the right place for me and how to approch for a Analyst role in this industry. Well, Hope is the only word that keeps the world running….and I too, believe in that word.

Anyways, another informative article on this subject with useful links can be found here.

World Stock markets and the barometer – Stock Index

A Stock Index is a basket of securities that include stocks of different industries and represents economic performance of a nation. A broad-based index represents the performance of a whole stock market and reflects investor sentiment about the state of the economy.For example, SENSEX (BSE Stock index) includes 30 stocks and NIFTY (NSE Stock index) includes 50 stocks of the topmost companies of various industries.

Popular Indexes – I have briefly described few of the most popular Indexes around the world, based on geography.

America

Nasdaq 100 – is a stock market index of 100 of the largest domestic and international companies listed on the NASDAQ stock exchange. It is a modified market value-weighted index, the companies weights in the index are based on their market capitalization. The Index does not contain financial companies, and includes companies incorporated outside the United States.

NYSE Composite - index is designed to measure the performance of all common stocks listed on the New York Stock Exchange. As of 2007, over 2,000 stocks are covered in the index, of which over 1,600 are from United States and over 360 are foreign listings. However foreign companies are very prevalent among the largest companies in the index: of the 100 companies in the index having the largest market capitalization (and thus the largest impact on the index), more than half (55) are non-U.S. issues. The index was originally given a value of 50 points, based on the market closing on December 31, 1965 The index is weighted using free-float market capitalization and calculated on both price and total return basis.

Dow Jones Industrial Average – (also called DJIA, Dow 30, Dow Jones , The Dow) is the most popular stock market index created by nineteenth century Dow Jones & Company co-founder Charles Dow. Dow compiled the index as a way to gauge the performance of the industrial component of America’s stock markets. The average consists of 30 of the largest and most widely held public companies in the United States. The “industrial” portion of the name is largely historical—many of the 30 modern components have little to do with heavy industry.

S&P 500 - is a stock market index containing the stocks of 500 large-Cap companies, most of which are American. The index is the most notable of the many indices owned and maintained by Standard & Poor’s, a division of McGraw-Hill. All of the stocks in the index are those of large publicly held companies and trade on the two largest US stock markets, the New York Stock Exchange and Nasdaq. After the Dow Jones Industrial Average, the S&P 500 is the most widely watched index of large-cap US stocks.

IBovespa index – is a Brazilian index of about 50 stocks that are traded on the Sao Paulo Stock Exchange (BM&F Bovespa). Its index number represents the present value of a portfolio that begun in January 2, 1968, with a starting value of 100. The Exchange (Sao Paulo) is the third largest exchange in the world. It was formed by merger of Sao Paulo Stock Exchange (Bovespa) and the Brazilian Mercantile and Futures Exchange (BM&F) on May 8, 2008 , creating the new BM&F Bovespa.

Europe

FTSE 100 – is index of the 100 most highly capitalized companies listed on the London Stock Exchange. The index began on 3 January 1984 with a base level of 1000. The index is maintained by the FTSE Group, an independent company which originated as a joint venture between the Financial Times and the London Stock Exchange.

DAX 30 – is a stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. It is a market capitalization-weighted average index. Futures and options contracts on the DAX 30 are listed on EUREX.

CAC 40 – is a benchmark French stock market index. The index represents a capitalization-weighted measure of the 40 most significant stocks among the 100 highest market caps on the Paris Bourse (now Euronext Paris). The CAC 40 is a market value-weighted index. Its base value was set to 1,000 on 31 December 1987.

Asia

Nikkei 225 – is a stock market index for the Tokyo Stock Exchange (TSE). The Nikkei average is the most watched index of Asian stocks. It has been calculated daily by the Nihon Keizai Shimbun (Nikkei) newspaper since 1971. It is a price-weighted average, and the components are reviewed once a year.

KOSPI (Korea Composite Stock Price Index) – is the index of stocks traded on the Korea stock Exchange. It’s the representative stock market index of South Korea. KOSPI was introduced in 1983 with the base value of 100 as of January 4, 1980.

Hang Seng (HSI)- is a free float market capitalization-weighted stock market index of Hong Kong stock exchange. It is the main indicator of the overall market performance in Hong Kong. These 40 companies represent about 65% of capitalization of the Hong Kong Stock Exchange. HSI was started on November 24, 1969, and is currently compiled and maintained by HSI Services Limited, which is a wholly owned subsidiary of Hang Seng Bank.

Microfinance in India

Microfinance refers to the provision of providing financial services to poor or low-income groups. In simple terms, microfinance means providing very poor families with very small loans (micro credit) to help them engage in productive activities or grow their tiny businesses.

More broadly, it refers to a movement that envisions “a world in which poor and near-poor households have permanent access to an appropriate range of high quality financial services, including not just credit but also savings, insurance, and fund transfers.”

Micro Finance Institutions (MFIs) came to prominence in the 1980s, although early experiments date back 30 years in Bangladesh, Brazil and a few other countries. Microcredit has largely been a private (non-profit) sector initiative that avoided becoming overtly political, and as a consequence, has outperformed virtually all other forms of development lending. MFIs insist on repayment, charge interest rates that could cover the costs of credit delivery, and focus on client groups whose alternative source of credit is the informal sector.

The Grameen Bank, one among the most famous microfinance organizations was awarded the Nobel Peace Prize in 2006. Originated from Bangladesh in 1976, it started disbursing small loans to the impoverished without requiring collateral. The founder, Professor Muhammad Yunus, transformed the institution into an independent bank by government legislation in1983.

India has seen an impressive growth in Microfinance Industry in the recent past. Microfinance is one of the few market-based, scaleable anti-poverty solutions that are in place in India today, and the argument to scale it up to meet the overwhelming need is compelling.

Some of the leading Microfinance Institutions in India are:

1) SKS Microfinance

Launched in 1998, SKS Microfinance is one of the fastest growing microfinance organizations in the world. SKS CEO and Founder, Vikram Akula, was recently recognized by Time Magazine as one of today’s 100 most influential people.

2) SHARE Microfin Limited (SML)

SML started operations in 1989 as a not-for-profit society. It was the first MFI in India to obtain a NBFC (non-deposit accepting) license and also the first Indian MFI to carry out a microfinance securitization transaction.

3) Spandana

Spandana was formed in 1997 by Padmaja Reddy and a few close peers who believed that there could exist simple, yet democratic and powerful systems that would enable the poor to harness their naturally entrepreneurial spirit. It is a regulated micro finance institution (MFI) providing financial and support services to rural Indians

If you are looking for a website that covers updated information on Micro Finance industry with various Micro Finance Institutions around the world, MIX MARKET is the right place. MIX MARKET is a global, web-based, microfinance information platform. Incorporated in June 2002 as a not-for-profit private organization, The MIX (Microfinance Information eXchange) aims to promote information exchange in the microfinance industry. The MIX MARKET currently provides data on 1229 MFIs and 101 investors.

You can find a White Paper on Micro finance from the following Link. This paper discusses the successes and failures of various microfinance institutions around the world and lessons learnt from the past in Microfinance Industry.