Kotak Mahindra Bank on Saturday posted a net profit of ₹3,496 crore for Q4 FY23, up 26 per cent y-o-y and 25 per cent q-o-q. For FY23, the profit after tax was up 28 per cent at ₹10,939 crore.

Net Interest Income (NII) for the quarter was up 35 per cent y-o-Y and 8 per cent q-o-q to ₹6,103 crore. For the year, NII was higher by 28 per cent at ₹21,552 crore. Net Interest Margin (NIM) was at 5.75 per cent for the quarter and 5.33 per cent for FY23.

In the post earnings meet, CFO Jaimin Bhatt said that because bulk of the loan book is retail, most of which is linked to an external benchmark—largely the repo—NIMs for the bank will continue to remain elevated even if the sharpness of future rate hikes comes down. He pegged NIM for the current financial year at similar levels to FY23.

Net Advances of the bank rose 18 per cent y-o-y to ₹3.2 lakh crore as at March 31.

corporate growth

Whole Time Director KVS Manian said that corporate credit demand is not very strong and while there some pockets, the bank is still not seeing capacity creation and loan demand arising out of that on secular basis. “There is significant amount of irrational pricing in the market. Broadly speaking, we have seen BBB entities getting the same rates as AA entities,” he said, pegging corporate credit growth for FY24 at 15-20 per cent.

Within retail loans, mortgage loans have seen some amount of plateauing in demand, especially in the lower income segment. However, because of competitiveness of rates, the market is still very high led by steady demand from the luxury and middle income segments, said Shanti Ekambaram,Group President – Consumer Banking.

Joint MD Dipak Gupta said the unsecured retail portfolio is about 10 per cent of the total book and the bank is looking to take the share up to “mid-teens” over the next couple of years. He added that after Covid and restructuring, the space is left with a better quality of customers which combined with better quality of data and analytics is providing more comfort on payment capabilities.

MD Uday Kotak said that the commercial banking vertical has also been seeing strong growth in segments such as trucks, microfinance, tractors and construction equipment.

CASA ratio

CASA ratio of the bank fell to 52.8 per cent as of March 31 from 53.3 per cent a quarter ago and 60.7 per cent a year ago. Manian said there is healthy growth in the bank’s term deposits whereas current account deposits are growing reasonably well. However, there is some deterioration in high value saving accounts, with balances of over ₹10 lakh, as customers shifted to other higher interest bearing instruments.

The bank will also look to build its savings deposits from the government/PSU business for which it received the licence last year, he said.

Capital Adequacy Ratio of the bank was 21.8 per cent, of which CET1 ratio was 20.6 per cent. Bhatt said that because the capital burn in FY23 is less than 1 per cent and the bank is generating healthy profits, there are no plans to raise capital at the moment.

Given the strong capital buffers and overall capital levels, the bank has the capability to and continues to explore inorganic growth opportunities. “We are open to small acquisitions, we are not afraid of big acquisitions…and we continue to stay hungry,” Kotak said.

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