- Revenue: Not explicitly mentioned.
- Net Income: INR4,435 crore consolidated profit, excluding KGI transaction, 7% higher Y-o-Y.
- Advances and Deposits Growth: Both grew around 20% Y-o-Y.
- Group AUM: Crossed INR636,000 crores.
- Capital Adequacy: 22.8% at group level, CET1 at 21.9%.
- ROE: 13.12% excluding KGI transaction, 13.44% adjusted for denominator effect.
- ROA: 2.3% excluding KGI transaction.
- Customer Assets: INR4,94,105 crores, 22% higher Y-o-Y.
- Net Worth Impact: INR3,414 crore post-tax gain from RBI direction on investment valuation.
- Bank PAT: INR3,520 crores excluding KGI transaction, 2% Y-o-Y growth.
- Bank Capital Adequacy: 22.4%, CET1 at 21.3%.
- Bank NIM: 5.02% for the quarter.
- Gross NPA: 1.39%, Net NPA at 0.35%.
- Credit Costs: Increased to 55 bps annualized.
- Operating Costs: Increased 14% Y-o-Y.
- Fees and Services Growth: 23% Y-o-Y.
- Kotak Securities Profit: INR400 crores, 83% Y-o-Y growth.
- Kotak AMC Profit: INR175 crores, 65% Y-o-Y growth.
- International Subsidiaries Profit: INR68 crores, up from INR32 crores Y-o-Y.
- KMCC Profit: INR81 crores, up from INR55 crores Y-o-Y.
- Kotak Mahindra Investment Profit: INR138 crores, 35% Y-o-Y growth.
- Kotak Prime Customer Assets: INR35,893 crores, 21% Y-o-Y growth.
- Kotak Prime PAT: INR232 crores.
- BSS Microfinance Profit: INR50 crores, down from INR95 crores Y-o-Y.
- Kotak Life PAT: INR174 crores, down from INR193 crores Y-o-Y.
- Consumer Bank Growth: 20% Y-o-Y, 3% Q-o-Q.
- Commercial Bank Growth: 20% Y-o-Y, 1% Q-o-Q.
- SME Corporate Bank Growth: 20% Y-o-Y, 4% Q-o-Q.
- Mortgage Lending Growth: 17% Y-o-Y, 4% Q-o-Q.
- Unsecured Retail Products Growth: 25% Y-o-Y, flat Q-o-Q.
- Business Banking Growth: 26% Y-o-Y, 4% Q-o-Q.
- Commercial Vehicles Growth: 20% Y-o-Y.
- Construction Equipment Growth: 16% Y-o-Y.
- Used Tractor Business Growth: 20% Y-o-Y.
- Wholesale Advances Growth: 6% Q-o-Q, 21% Y-o-Y.
- Average Total Deposits Growth: 21% Y-o-Y, 7% Q-o-Q.
- Term Deposits Growth: 38% Y-o-Y.
Release Date: July 20, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kotak Mahindra Bank Ltd (BOM:500247, Financial) successfully closed the disinvestment of a 70% stake in Kotak General Insurance with Zurich Insurance, generating INR5,560 crores.
- The bank reported a consolidated profit of INR4,435 crore, excluding the KGI transaction, which is about 7% higher than the same quarter last year.
- Advances and deposits both grew at around 20% year on year, with the bank's customer assets growing 20% Y-o-Y and 3% during the quarter.
- The bank's capital adequacy at the group level is robust at 22.8%, with CET1 itself at 21.9%.
- Kotak Securities and Kotak AMC performed well, with Kotak Securities recording an 83% Y-o-Y growth in profit and Kotak AMC's profit up 65% compared to last year.
Negative Points
- The RBI order impacted the 811 customer and credit card businesses, leading to a slowdown in unsecured book growth and consequently affecting NIM.
- Challenges on low-cost deposits continued, with savers turning into investors, deploying money in high-yielding capital market products.
- The bank experienced stress in certain pockets of consumer, retail, and unsecured assets, particularly at the low-ticket levels and in segments where customers are overleveraged.
- Credit costs at the bank increased to 55 bps annualized, largely due to losses in the unsecured retail book in lower ticket segments and select geographies for the microcredit business.
- The bank's NIM decreased to 5.02% from 5.28% in the previous quarter, impacted by increased cost of funds and a slowdown in high-yield unsecured business.
Q & A Highlights
Q: Firstly, on the growth front, so if we look at on incremental basis and hardly out of say, INR13,000 crores-odd INR14,000 crores-odd, kind of a growth, almost like INR10,000 crores coming from the lower-yielding corporate as well as the home loan. And given that this is just the first quarter impact on the unsecured, and you indicated that credit cost -- credit card stress is also rising. So do we see maybe now the delta being more towards respect the order compared to unsecured and our guidance of 15% and beyond, maybe that could be relatively lower in the coming quarters the way we saw decline this quarter as well?
A: Yeah, Kunal, let me take that, and Shanti, if you could kind of pipe in, right? So look, by definition during the first quarter because of the RBI order, we couldn't grow our unsecured book. Obviously, we didn't put on any new additional cards nor the digital journey for the PL kind of thing work for us. So actually, as a percentage of total advances, unsecured loans, retail, unsecured loans have actually dipped by 20 basis points. But our goal to kind of get to mid-teens on our unsecured retail book continues, and hopefully we'll get back to that, that back to marching towards that goal once the embargo is lifted. Shanti, anything you would add?
Shanti Ekambaram: Yeah, so I just want to two, three things, Kunal. Firstly, if you look at the corporate, their focus has sharply increased in the SME and the mid-market businesses that I talked about how we are seeing robust growth there with new acquisitions. And the share of non-risk incomes and actually gone up. Second, on the mortgages, it's not just about home loans, but it's also LAP. We have a very strong market share in LAP, where the yields are higher and I also mentioned that during this quarter, both in home loans and LAP, we've actually been able to see an increase in. So from a secured asset perspective, working capital businesses, whether it's in the consumer bank, whether it's in the wholesale bank and the mortgages, which is LAP in home loans, have grown. Unsecured businesses, retail, we continue to maintain a strategy of moving towards the mid-teens. But as I should say, credit cards, NPLs, we could not grow. Credit cards remains a very important and strategic product as part of our customer proposition and once the embargo is lifted, we will be back and we'll be growing this businesses.
Q: And secondly, on margins, if we look at trucks of the interest on a delinquent and maybe the impact, which has been there of almost 16 odd basis points, maybe on a calculated basis, it suggests like there is an half impact on account of yield contraction and half of it is on account of the contraction and the half of it on account of cost of deposits. So would that be the right assumption even when we look at it on a -- maybe on a reported basis to give cost of funds, but purely looking at the cost of deposits, and yield on advances, could there be a similar kind of impact?
A: So Kunal, just to correct you, the interest on IT refund was not considered for the calculation on NIM because the name is calculated on average earning assets. So it was anyway not considered last quarter. I think the last quarter NIM actually got impacted because of also the Sonata transaction, which we've disclosed, we did it on March 28. So where the average assets went lower and the interest income came for a larger figure. So that gives us some kicker on that, right. So you are right in terms of this quarter, it's a mixture of increasing cost of funds, which we have now disclosed. If you see it has moved from the cost of funds has increased and also the cost increase, I mean, the reduction in the yield on the advances, which got impacted by the share of unsecured advances which dipped as per the reasons mentioned by Ashok and Shanti. So both of them has impacted volume. But as I said, again, I think the way to look at it is March was a bit of aberration. The right way to perhaps look, it is the September NIM, which is 5.22%, going down to 5.02% is about 20 bps, which is the case.
Kunal Shah: And NIM guidance continue at 5%-plus, maybe trying to sustain it over 5%-odd?
Devang Gheewalla: We will, of course, try to see how it goes. Obviously, the liquidity is out will help us and of course, how do we just crossed the progress of the low-cost deposit strategy as well as how the personal loan, all of those factors will actually getting impact that obviously the biggest question is the reported, how it moves also will impact. So it's very difficult to say as of now, how it will work.
Q: Hi, good evening, everyone. I have a bunch of questions. First of all to start with, on the growth bit, quite pleasantly surprised that, first quarter typically is a weak quarter given seasonality and senior management pushed up the growth momentum. So is this more like the opportunities presented for itself because the corporate income, which has been one of the drivers for growth, we keep hearing that the pricing is quite ridiculous, if I may so. So was it because the opportunities were unique to your bank that, we pursued that growth and how sustainable would this be at an aggregate level also as well as the corporate bit (inaudible)
A: Yeah. So Rahul, I'll make some kind of opening comments and then [Paritosh] is here with me, and maybe he can talk to you about the corporate. Frankly, from my perspective, I think that our corporate team has done a really nice job of pushing the agenda. Like Shanti mentioned, they've defined like a three-year plan. We are very, very focused on where there is growth in the economy, who is the right people to go after and building it out in a sense with a very sharp focus on return on equity. So this is not about just lending at any rate. This is about actually consummating a proper corporate relationship building out the mid-market book, building up the SME book, and this is a focus that we're going to continue and hopefully continue with far greater vigor as a quarter standalone. But let me have Paritosh comment on it as well.
Paritosh Kashyap: Yeah, thanks. So we have been focusing a lot on building our trade and transaction banking book. And Shanti mentioned that both trade and supply chain have grown significantly in this quarter, we have looked at our numbers and our trade active customers gives us far larger car. And also it gives us significant upside in FX revenue and hence, doing more trade and mode -- and larger focus on transaction banking helps us both on liabilities as
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
