Dont know how many investors have created wealth from banking sector, banking is highest leveraged business, loan book is always 15-20 times of equity, 5% bad loans wipe of equity capital, story of RBL, Yes, Ujjivan, All PSU banks, Small finance banks, even Biggies like HDFC, Kotak are unable to generate Roe. Axis, Indusind, big laggards, Only ICICI Bank looks promising that too has compounded 14% in last 16 years. Any economic downturn takes all banks to dust, I have been blown out in yes bank badly, stopped seeing banks as investment candidates from Jan 2020 onwards and still happy with my decision as my capital could have been put to Idle for two years and could have missed out on multibaggar gains made in past 2 years. Never believed in Infra exposure of IDFC first bank. It will be very difficult to generate RoA for IDFC first due to large equity base and agressive practices.
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