Private bank Kotak Mahindra Bank has released the results for the June quarter. The consolidated net profit of the bank increased by 22.55% on annual basis to Rs 5,480.46 crore. It was Rs 4,472.18 crore in the same quarter last year. At the same time, the net profit of the bank on standalone basis was Rs 4,122.96 crore, which was Rs 3,281.68 crore a year ago. The bank’s Net Interest Income (NII), i.e. the main income from interest, increased by 9% to Rs 7,928 crore, which was Rs 7,259 crore last year. However, the Net Interest Margin (NIM) declined to 4.53%. Last year it was 4.65% and in the last quarter it was 4.67%. That means there was some pressure on the bank’s ability to earn interest.
The bank’s earnings from fees and services increased by 11% to Rs 2,500 crore. However, it decreased by 10% as compared to the previous quarter. This means that the growth continued on an annual basis, but the pace slowed down a bit in the recent quarter. Kotak Mahindra Bank MD and CEO Ashok Vaswani said that he will step down from his post at the end of December this year. He told that this decision has been taken for both personal and professional reasons. According to him, the bank has made major changes in the last three and a half years and is now in a strong position for the next growth phase.
What changes were made in the bank?
Vaswani said that during his tenure, the bank resolved technology-related issues, prepared a new management team, improved the personal loan, credit card and microfinance business and strengthened the deposit base. He said that now the bank is in a stronger position than before and is ready to grow rapidly. He said that the bank’s board and Nomination and Remuneration Committee (NRC) will start the process of appointing the new CEO as per RBI rules. The bank has a strong team internally, but external candidates will also be considered if required.
Great growth in deposits and loans
The bank’s total deposits increased by 14% to Rs 5.59 lakh crore in the June quarter, whereas it was Rs 4.92 lakh crore a year ago. At the same time, the total loan increased by 15% to Rs 5.28 lakh crore. However, the share of CASA i.e. current and savings accounts of the bank decreased from 43.3% to 40.3%. Ashok Vaswani said that there is good demand for FCNR-B deposits from NRI customers. The bank is planning to raise such deposits through GIFT City and Dubai International Financial Center (DIFC). For this, partnerships will also be made with banks of Asia, Middle East and other countries. He says that most of the money is expected to come in deposits with tenure of three and five years, which will further strengthen the bank’s deposit base.
Will benefit from RBI’s FCNR-B scheme
In the June monetary policy meeting, RBI had started the special FCNR-B window to increase foreign capital and strengthen the external financial position of the country. By taking advantage of this scheme, the bank wants to raise more deposits in foreign currency. The bank said that it has given loans worth about Rs 3,000 crore to MSME and SME customers under ECLGS 5.0. The bank is constantly monitoring the status and repayment of these loans and there is no major concern at present. Apart from this, gold loan business is growing rapidly and the bank is starting its facility in more branches. At the same time, after adopting the new strategy for the customers, the bank has started achieving growth again in the credit card business also.
What will be the impact on the stock?
In the quarterly results of Kotak Mahindra Bank, profit, deposit and loan growth has been strong, which can be considered a positive sign for the stock. However, decline in NIM, low CASA ratio and announcement of CEO stepping down are the issues on which investors will keep an eye. In such a situation, both good rise and fall can be seen in the stock on Monday.
Disclaimer: This article is for information only and should not be considered as investment advice in any way. TV9 Bharatvarsh advises its readers and viewers to consult their financial advisors before taking any money-related decisions.
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