Ajanta Pharma shines after USFDA nod

In total, Ajanta has 26 Abbreviated New Drug Application (ANDA) of which it has final approvals for 12 ANDAs; tentative approvals for 1 ANDA; and 13 ANDAs are under review with US FDA.

Ajanta Pharma Ltd is currently trading at Rs. 1757.25, up by Rs. 31.65 or 1.83% from its previous closing of Rs. 1725.6 on the BSE.

Ajanta Pharma Limited announces the receipt of final approval for Omeprazole and Sodium Bicarbonate Powder for Oral Suspension from US FDA. It is a bioequivalent generic version of Zegerid1 Powder for Oral Suspension and the company will be launching the product soon in 2 strengths 20 mg / 1680 mg & 40 mg / 1680
mg Powder Sachets.

This new approval is part of an ever growing portfolio of products that Ajanta has developed for the US market. In total, Ajanta has 26 Abbreviated New Drug Application (ANDA) of which it has final approvals for 12 ANDAs; tentative approvals for 1 ANDA; and 13 ANDAs are under review with US FDA. 

The scrip opened at Rs. 1725 and has touched a high and low of Rs. 1776.75 and Rs. 1720.1 respectively. So far 131356(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 15186.14 crore.

The BSE group 'A' stock of face value Rs. 2 has touched a 52 week high of Rs. 1745 on 26-Jul-2016 and a 52 week low of Rs. 1103 on 18-Jan-2016. Last one week high and low of the scrip stood at Rs. 1745 and Rs. 1601.7 respectively.

The promoters holding in the company stood at 73.78 % while Institutions and Non-Institutions held 12.06 % and 14.16 % respectively.

The stock is currently trading above its 50 DMA.

L&T Infotech Q1 Net Income surges 35% yoy; USD Revenue Growth at 11%

The company's revenue is at Rs.15,550 Million; growth at (0.2%) QoQ and 16.6% yoy.

L&T Infotech, a global IT services and solutions provider, announced its Q1 FY17 results.

In US Dollars:

• Revenue at USD 231.1 million; growth of 0.6% QoQ and 10.8% YoY
• Constant Currency Revenue growth of (0.3%) QoQ and 12.1% YoY

"I am very pleased to report a solid quarter of strong execution, resulting in increased profitability. With over 4% sequential growth in services revenue and close to 22% of our projects in Digital technologies, we have seen growth across verticals. During last year, we have embarked on a journey to build a next generation IT services and solutions company, focused on solving the challenges of physical and digital convergence. We are investing in building differentiated offerings, competencies, training and reskilling that are aligned to client demand and spends. Our strategic intent is to build significant strength in five areas of growth – Digital, Analytics, IIoT, Cloud Apps and Automation."

"I also take this opportunity to thank all our investors who have reposed their faith in us during our recent IPO. Building shareholder value is an important goal for us”, Sanjay Jalona, Chief Executive Officer & Managing Director said.

In Indian Rupees:

• Revenue at Rs 15,550 million; growth at (0.2%) QoQ and 16.6% YoY
• Net Income at Rs 2,358 million; Net Income growth at 3.3% QoQ and 35% YoY

Other Business Highlights

• LTI & GE Digital announced a Global Strategic Partnership to develop Digital Industrial Solutions
• LTI joined the Pivotal Ready Partner Program from Pivotal Labs in this quarter
• Launched Facebook at Work, becoming the first IT services and solutions company to adopt the new collaboration platform. It is bringing our global teams closer, enabling a culture change, and fostering innovation across the organization
• Set up a Digital Lab at our new office in Paris to facilitate co-innovation and co-creation with customers

Awards and Recognitions:

• Annual Report for the year ending March 2016 was adjudged a Gold Winner by the League of Americans Communications Professionals (LACP) in the category of IT Services companies with up to $1 Bn in revenue
• LTI named as a 'Major Player' in IDC’s MarketScape: Canada Mobile Application Testing Services 2016 Vendor Assessment
• LTI ranked as ‘Major Contender’ & ‘Star Performer’ in Everest Group's Testing PEAK Matrix 2016
• LTI has featured as an ‘Aspirant’ in Everest Group’s SaaS Implementation Service Providers’ Assessment PEAK MatrixTM 2016
• LTI mentioned in Gartner’s 'Vendors to Watch' for Application Testing Services
• LTI mentioned in Gartner's Market Guide for BI & Analytics, APJ

Bank of Japan keeps deposit rate at -0.1%

The Bank will purchase ETFs so that their amount outstanding will increase at an annual pace of about 6 trillion yen (almost double the previous pace of about 3.3 trillion yen).

Against the backdrop of the United Kingdom's vote to leave the European Union and the slowdown in emerging economies, uncertainties surrounding overseas economies have increased and volatile developments have continued in the global financial markets. In order to prevent these uncertainties from leading to a deterioration in business confidence and consumer sentiment as well as to ensure smooth funding in foreign currencies by Japanese firms and financial institutions, thereby supporting their proactive economic activities, at the Monetary Policy Meeting (MPM) held today, the Policy Board of the Bank of Japan decided upon the following.

An increase in purchases of exchange-traded funds (ETFs) by a 7-2 majority vote

The Bank will purchase ETFs so that their amount outstanding will increase at an annual pace of about 6 trillion yen (almost double the previous pace of about 3.3 trillion yen).

(2) Measures to ensure smooth funding in foreign currencies by Japanese firms and financial institutions by a unanimous vote.

a) Increasing the size of the Bank's lending program to support growth in U.S. dollars

The Bank will increase the size of its lending program to support growth in U.S. dollars (the Special Rules for the U.S. Dollar Lending Arrangement to Enhance the Fund-Provisioning Measure to Support Strengthening the Foundations for Economic Growth Conducted through the Loan Support Program) to 24 billion USD (about 2.5 trillion yen; double the previous size of 12 billion USD). Under this lending program, the Bank provides its U.S. dollar funds for a period of up to 4 years to support Japanese firms' overseas activities through financial institutions.

b) Establishing  a new facility for lending securities to be pledged  as collateral for   the
U.S. Dollar Funds-Supplying Operations

The Bank will establish a new facility m which it lends Japanese government securities (JGSs) to financial institutions against their current account balances with the Bank so that these JGSs can be pledged as collateral for the U.S. Dollar Funds-Supplying Operations.
2. With regard to the guideline for money market operations, the guidelines for asset purchases except for ETF purchases, and the policy rate, the Bank decided to leave these unchanged.
(1) Quantity Dimension: The guideline for money market operations

The Bank decided, by an 8-1 majority vote, to set the following guideline for money market operations for the intermeeting period:[Note 21

The Bank of Japan will conduct money market operations so that the monetary base will increase at an annual pace of about 80 trillion yen.
(2) Quality Dimension: The guidelines for asset purchases

With regard to the asset purchases, the Bank decided, by an 8-1 majority vote, to set the following guidelines:[Note 21

a) The Bank will purchase Japanese g9vemment bonds (JGBs) so that their amount outstanding will increase at an annual pace of about 80 trillion yen. With a view to encouraging a decline in interest rates across the entire yield curve, the Bank will conduct purchases in a flexible manner in accordance with financial market conditions. The average remaining maturity of the Bank's JGB purchases will be about 7-12 years.
b) The Bank will purchase Japan real estate investment trusts (J-REITs) so that their amount outstanding will increase at an annual pace of about 90 billion yen.
c) As for CP and corporate bonds, the Bank will maintain their amounts outstanding at about 2.2 trillion yen and about 3.2 trillion yen, respectively.

(3) Interest-Rate Dimension: The policy rate

The Bank decided, by a 7-2 majority vote, to continue applying a negative interest rate of minus 0.1 percent to the Policy-Rate Balances in current accounts held by financial institutions at the Bank.

3. The Government is undertaking fiscal and structural policy initiatives, including a large-scale "stimulus package," which is currently being compiled. The Bank will pursue "Quantitative and Qualitative Monetary Easing (QQE) with a Negative Interest Rate" including measures decided today and provide highly accommodative financial conditions. The Bank believes that these monetary policy measures and the Government's initiatives will produce synergy effects on the economy.

4. The Bank will continue with "QQE with a Negative Interest Rate," aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner. It will examine risks to economic activity and prices, and take additional easing measures in terms of three dimensions -- quantity, quality, and the interest rate -- if it isjudged necessary for achieving the price stability target.

As shown in the July 2016 Outlook for Economic Activity and Prices (Outlook Report) released today, there is considerable uncertainty over the outlook for prices against the background of uncertainties surrounding overseas economies and global financial markets. Against this backdrop, with a view to achieving the price stability target of 2 percent at the earliest possible time, the Bank will conduct a comprehensive assessment of ·the developments in economic activity and prices under "QQE" and "QQE with a Negative Interest Rate" as well as these policy effects at the next MPM. The Chairman instructed the staff to prepare for deliberations at the next meeting.

Axis Bank to offer LIC products to its customers

Axis Bank signed an MoU to distribute LIC’s multiple life insurance products to their customers. This is one of the largest Bancassurance partnerships after the recent IRDA regulations issued on open architecture framework for banks.

Axis Bank signed an MoU to distribute LIC’s multiple life insurance products to their customers. This is one of the largest Bancassurance partnerships after the recent IRDA regulations issued on open architecture framework for banks.
 
Life Insurance Corporation of India, India’s largest life insurance company with a market share of 76.8% in policies and 70.4% in first premium, and Axis Bank, India’s third largest private sector bank with widespread network of 3006 branches (including extension counters), signed an MoU to distribute LIC’s multiple life insurance products to their customers. This is one of the largest Bancassurance partnerships after the recent IRDA regulations issued on open architecture framework for banks. In the preliminary phase, the bank will distribute LIC’s life insurance products across its branches in West Bengal, Bangalore and Haryana – Panchkula. Additionally, the bank will also provide post sales services such as premium collection and renewal of policies.
 
Mukesh Gupta, Executive Director, Bancassurance, LIC expressed that “The coming together of the two major reputed organisations would enable them to combine and utilise the synergies for enhancing customer satisfaction and for serving social objectives of the nation”.
 
Rajiv Anand, Executive Director & Head Retail Banking, Axis Bank added “Banks have increased their role in Insurance distribution with Bancassurance being the biggest contributor. Over the last five years the Life Insurance business at Axis Bank has grown at a CAGR of over 25%. The partnership with LIC would enable us to further expand our existing bouquet of offerings and put forth a compelling proposition for our customers.”
 
The bank will continue to invest in disruptive technologies to translate customer requirements into actionable insights and accordingly advice on the best fit policies from India’s leading insurance companies.

Top 24 stocks in focus: ICICI Bank, Coal India, Eicher Motors

Check out the companies which will be in focus during trade today based on recent and latest news developments.

ICICI Bank: ICICI Bank will announce its Q1 numbers today.

Eicher Motors: The company has posted a net profit after taxes and profit of joint ventures of Rs.376 crore for the quarter ended June 30, 2016 as compared to Rs.237 crore for the quarter ended June 30, 2015.

Ortel Comm: The company reported its Q1 total income increased to Rs.529 million from Rs.431 million, up by 22.9%.

L&T: The company will announce its Q1 numbers today.

Hexaware Technologies: The company has posted a profit after tax of Rs.999.984 million for the quarter ended June 30, 2016 as compared to Rs.988.854 million for the quarter ended June 30, 2015.

 Karnataka Bank: The bank will announce its Q1 numbers today.

Syndicate Bank: The Bank has posted a net profit of Rs.79 crore for the quarter ended June 30, 2016 where as the same was at Rs.302 crore for the quarter ended June 30, 2015.RBI has imposed an aggregate penalty of Rs. 30 million on the Bank in the exercise of powers conferred under Section 47(A)(1)(c) read with Section 46(4) (i) of the Banking Regulation Act, 1949.

Grindwell Norton: The company recorded a increase of 15.7% in its net profit at Rs.29.5 crore for the quarter ended June 30, 2016 as compared to Rs.25.5 crore for the quarter ended June 30, 2015.

Sintex Industries: The company has posted a net profit after taxes, minority interest and share of profit of associates of Rs.76 crore for the quarter ended June 30, 2016 as compared to Rs.68.2 crore for the quarter ended June 30, 2015.

Punjab National Bank: The bank has posted a net profit of Rs.306 crore for the quarter ended June 30, 2016 as compared to Rs.721 crore for the quarter ended June 30, 2015.

Axis Bank: The bank has signed an agreement with Life Insurance Corporation to distribute policies of the country’s largest life insurer.

Dish TV: The company reported consolidated revenues of Rs.778.6 crore for the quarter ended 30 June (Q1FY17), up 5.7% from last year’s Rs.736.7 crore.

Jaiprakash Associates Ltd: The company has failed to pay a total of Rs.36.25 crore in principal instalment and interest for non-convertible debentures (NCDs) due 25 April.

IDBI Bank: IDBI Bank has reduced its base rate or minimum lending rate to 9.65% per annum from 9.75% per annum earlier.

Sun Pharma: Sun Pharmaceutical Industries has entered into $50 million licensing agreement with Spanish firm Almirall for the development and commercialisation of tildrakizumab, a drug to treat psoriasis, in Europe

Kirloskar Ferrous Industries: The company will acquire VSL Steels’s pig iron plant for Rs.155 crore in cash

Coal India: The company will announce its Q1 numbers today.

Nestle: The company will announce its Q1 numbers today.

L&T Infotech: The company reported nearly 35% increase in net profit at Rs.235.8 crore for the quarter ended June 30.

CEAT: The company reported 17.38% decline in consolidated net profit at Rs.93.07 crore for the first quarter ended June 30, 2016-17.

Blue Dart: Blue Dart Express standalone net profit dropped marginally by 1.4% to Rs.44.08 crore for the quarter ended June 30, 2016.

Tamil Nadu Newsprint and Papers Ltd: The company has reported a 33% growth in profit after Tax during the quarter ended June 30, 2016 at Rs.69.51 crore, as against Rs.52.25 crore, a year ago.

DLF: Azure Power has tied up with DLF to set up solar projects on rooftops of the builder's properties, mainly in Gurgaon, where the first smart grid is coming up.

Mahindra Lifespace Developers: The company has reported over 36% on-year rise in standalone net profit at Rs.15 crore for the quarter ended June 30. 

Muthoot Finance Q1 net profit rises 47.6% yoy

The Company has posted a net profit of Rs.2702.682 million for the quarter ended June 30, 2016 as compared to Rs.1831.599 million for the quarter ended June 30, 2015.

Muthoot Finance Ltd has announced the following Unaudited Standalone results for the quarter ended June 30, 2016:
 
The Company has posted a net profit of Rs.2702.682 million for the quarter ended June 30, 2016 as compared to Rs.1831.599 million for the quarter ended June 30, 2015. Total Income has increased from Rs.11426.184 million for the quarter ended June 30, 2015 to Rs.13008.193 million for the quarter ended June 30, 2016.

Stock View:
 
Muthoot Finance Ltd is currently trading at Rs. 331.5, up by Rs. 12.85 or 4.03% from its previous closing of Rs. 318.65 on the BSE.
 
The scrip opened at Rs. 330 and has touched a high and low of Rs. 340 and Rs. 328.6 respectively. So far 517978(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 12715.76 crore.
 
The BSE group 'A' stock of face value Rs. 10 has touched a 52 week high of Rs. 323 on 28-Jul-2016 and a 52 week low of Rs. 152 on 23-Sep-2015. Last one week high and low of the scrip stood at Rs. 323 and Rs. 263 respectively.
 
The promoters holding in the company stood at 74.63 % while Institutions and Non-Institutions held 20.49 % and 4.88 % respectively.
 
The stock is currently trading above its 50 DMA.

RBI imposes Monetary Penalty on UCO Bank

This penalty has been imposed in exercise of powers vested in the Reserve Bank under the provisions of Section 47(A)(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949, taking into account the violations of the instructions/ directions/guidelines issued by the Reserve Bank from time to time.

The Reserve Bank of India has imposed a monetary penalty of Rs.10 Million on UCO Bank for contravention of its instructions relating to opening of current account and providing bill discounting facilities to account holders without having any borrowing facility with the bank resulting in siphoning of funds.

This penalty has been imposed in exercise of powers vested in the Reserve Bank under the provisions of Section 47(A)(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949, taking into account the violations of the instructions/ directions/guidelines issued by the Reserve Bank from time to time.

This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank and its customers.

Punjab National Bank Q1 PAT down 57.5% to Rs.306 cr; Gross NPA at 13.75%

The bank has posted a net profit of Rs.306 crore for the quarter ended June 30, 2016 as compared to Rs.721 crore for the quarter ended June 30, 2015.

Punjab National Bank has announced the following unaudited standalone results for the quarter ended June 30, 2016:

The bank has posted a net profit of Rs.306 crore for the quarter ended June 30, 2016 as compared to Rs.721 crore for the quarter ended June 30, 2015. The bank's total income has increased from Rs.13,432 crore for the quarter ended June 30, 2015 to Rs 13,930 crore for the quarter ended June 30, 2016.

Stock view:

Punjab National Bank is currently trading at Rs. 133.3, up by Rs. 0.55 or 0.41% from its previous closing of Rs. 132.75 on the BSE.

The scrip opened at Rs. 133.3 and has touched a high and low of Rs. 136.35 and Rs. 132 respectively. So far 18714090(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 26066.76 crore.

The BSE group 'A' stock of face value Rs. 2 has touched a 52 week high of Rs. 180.5 on 17-Aug-2015 and a 52 week low of Rs. 69.4 on 17-Feb-2016. Last one week high and low of the scrip stood at Rs. 134.9 and Rs. 117 respectively.

The promoters holding in the company stood at 62.08 % while Institutions and Non-Institutions held 31.36 % and 6.55 % respectively.

The stock is currently trading above its 200 DMA.

RBI imposes penalty of Rs.2 crore on IndusInd Bank

The Bank has reinforced the control process so as to prevent such occurrences in future.

Indusind Bank Ltd has informed BSE that on the basis of media reports relating to certain irregularities in advance remittance for import / export transactions in the banking system, the Reserve Bank of India conducted a scrutiny under Section 35(1A) of the Banking Regulation Act 1949. A Show Cause Notice was issued, to which the Bank gave a detailed response. After considering the written and oral submissions of the Bank, the RBI has imposed a penalty of Rs.20 million on the Bank, citing grounds of non-adherence to KYC/AML Guidelines.

The Bank has reinforced the control process so as to prevent such occurrences in future.

The scrip opened at Rs. 1178.05 and has touched a high and low of Rs. 1191.15 and Rs. 1173 respectively. So far 222056(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 70209.81 crore.

The BSE group 'A' stock of face value Rs. 10 has touched a 52 week high of Rs. 1182 on 27-Jul-2016 and a 52 week low of Rs. 799 on 11-Feb-2016. Last one week high and low of the scrip stood at Rs. 1182 and Rs. 1105.15 respectively.

The promoters holding in the company stood at 14.88 % while Institutions and Non-Institutions held 55.3 % and 18.97 % respectively.

The stock is currently trading above its 50 DMA.

Top 14 stocks in focus: Sun Pharma, Bharti Airtel, PNB

Check out the companies which will be in focus during trade today based on recent and latest news developments.

Sun Pharma: Sun Pharma and its wholly owned subsidiary and Almirall announced a licensing agreement on the development and commercialization of tildrakizumab for psoriasis in Europe.

Bharti Airtel: The company reported its net profit rose 70.9% to Rs.756.20 crore in the quarter ended June 2016 as against Rs.442.40 crore during the previous quarter ended June 2015. 

PNB: The bank will announce its Q1 numbers today.

Maruti Suzuki: The country’s largest passenger vehicle maker Maruti Suzuki India Limited announced that it will start sales of its first Light Commercial Vehicle (LCV) - Super Carry towards the end of August. 

State Bank of Bikaner and Jaipur: Reserve Bank of India has imposed an aggregate penalty of Rs. 20 million on the Bank in exercise of the powers conferred under Section 47(A)(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949 in case of advance import remittance irregularities.

Bharat Forge: Bharat Forge Limited and Elbit now hold 51% and 49% equity share capital of BF Elbit Advanced Systems Private Limited, respectively.

Dabur India: The company reported 11.8% rise in net profit at Rs.292.80 crore for the quarter ended June 30, 2016 against Rs.261.84 crore in the corresponding quarter a year ago.

Asian Paints: The company has posted a net profit after tax of Rs.5011.80 million for the quarter ended June 30, 2016 as compared to Rs. 4275.40 million for the quarter ended June 30, 2015.

Castrol India: The company has posted a net profit after tax of Rs.2069 million for the quarter ended June 30, 2016 as compared to Rs.1845 million for the quarter ended June 30, 2015.

RPG Life Sciences: Sun Pharmaceutical Industries signed an agreement with RPG Life Sciences Ltd to divest seven prescription brands in India.

Lupin: Lupin Pharmaceuticals Inc. has received tentative approval from the United States Food and Drug Administration (FDA) to market a generic equivalent of ViiV Healthcare’s (ViiV) Lexiva Tablets, 700 mg (Fosamprenavir Calcium Tablets, 700 mg). 

United Spirits: United Spirits said it will stop manufacturing operations in Bihar due to the ban on sale of alcohol in the state that took effect from 1 April.

L&T Infotech: L&T Infotech will announce its Q1 result today. The company announced a strategic partnership with GE Digital combining LTI’s diverse industrial capabilities with GE’s Predix cloud-based operating system for the Industrial Internet.

Glenmark: Glenmark Pharmaceuticals Inc., USA (Glenmark) has been granted final approval by the United States Food & Drug Administration (U.S. FDA) for Potassium Chloride Extended-Release Tablets USP, 10 mEq (750 mg) and 20 mEq (1500 mg), the generic version of K-Dur (Potassium Chloride) Extended-Release Tablets, 10 and 20 mEq, of Merck Sharp and Dohme Corp (which is no longer being marketed in the United States).

Chinese authorities will continue to allow credit to drive growth, expects Fitch

Chinese banks' viability ratings (VRs), which range from 'bb' to 'b', reflect substantial but varying risks to capital and asset quality. Fitch's base-case assessment of banks' intrinsic profiles considers relative loss-absorption capacity rather than subjectively adjusting reported NPL data.

The rapid pace of growth in Chinese leverage since 2008, which has contributed to economic imbalances and decreasing credit efficiency, poses significant asset-quality risks for Chinese banks, says Fitch Ratings in a Special Report published.
 
Credit to GDP, as measured by Fitch-adjusted total social financing, has roughly doubled over the past eight years, while credit/GDP productivity rates since 2008 indicate substantial mal-investment and further increases in problem credit. Fitch believes the Chinese authorities will continue to allow credit to drive growth and prefer to restructure debt rather than allow mass defaults, regardless of the size of problem credit in the economy. Bad debt may be socialised and other tools employed over time - including offsetting risks through capital market issuance - to help the resolution process. The migration of debt to the sovereign balance sheet is more probable than a wholesale upfront carve-out of assets.
 
Chinese banks' viability ratings (VRs), which range from 'bb' to 'b', reflect substantial but varying risks to capital and asset quality. Fitch's base-case assessment of banks' intrinsic profiles considers relative loss-absorption capacity rather than subjectively adjusting reported NPL data. This is due to uncertainties relating to on-and-off balance sheet asset quality. That said, Fitch's report addresses questions about the potential size of asset quality problems facing the financial system and the process by which they will likely be addressed, with reference to implications for bank ratings.
 
The report also outlines two alternative scenarios beyond the base case to help frame the potential scale of risk and policy solutions. The scenarios - based around core assumptions pertaining to inefficient credit, impairment rates and loss rates - assume a one-off resolution of the debt problem over the more probable multi-year process.
 
Our alternative scenario assumptions yielded NPL rates of 15%-21% for the financial system, resulting in a one-off capital shortfall of CNY7.4trn-13.6trn (USD1.1trn-2.2trn) - equivalent to around 11%-20% of GDP. The aggregate capital gap for Fitch-rated commercial banks is CNY4.9trn-8.7trn, but individual gaps relative to risk-weighted assets vary across the portfolio.
 
Fitch has long highlighted how Chinese banks' strengths and in particular weaknesses are factored into their ratings. The pace of credit growth, the rise of shadow banking and limited transparency around certain risks have especially weighed on VRs. The size of the problem will ultimately grow, which is why we conducted the alternative scenario analysis. The scenarios are not factored into banks' ratings, and Fitch does not expect the exercise to lead directly to rating actions. Nevertheless, how the debt resolution plays out will determine bank ratings. Bank VRs may be subject to change in the event of an unexpected significant one-off fall in credit exposure, depending on its size and purpose, how the fall was achieved, and a bank's sustainable financial profile after the event.
 
All Issuer Default Ratings for Fitch-rated Chinese banks are support-driven, and any rating changes are tied to perceived changes in the propensity or ability of the sovereign to support the banks. Support already appears to be playing out in less explicit ways, but larger issues affecting the banks - such as idiosyncratic risks and resolution - are less inclined to face public disclosure, even though systemic issues tend to require greater disclosure to address market concerns. If support for the financial system crystallises on the sovereign's balance sheet and sufficiently alters its financial profile to warrant rating action on the sovereign, it could result in similar rating action for bank IDRs.