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Kotak Mahindra Bank will not shy away from taking 'bolder bets', says Uday Kotak

During the year, the bank has undertaken a mindset shift to make retail and commercial lending focus, in addition to the corporate and deposit franchise, the veteran banker said in his message at the 2020-21 annual report.

July 30, 2021 / 08:20 AM IST
Uday Kotak is of the view that the Budget for FY22 was conservative in its revenue estimates, because if which a 6.8 percent fiscal deficit can be managed.

Uday Kotak is of the view that the Budget for FY22 was conservative in its revenue estimates, because if which a 6.8 percent fiscal deficit can be managed.


Kotak Mahindra Bank Managing Director and CEO Uday Kotak on July 29 said the bank will get "bolder" in unsecured retail finance going ahead.

During the year, the bank has undertaken a mindset shift to make retail and commercial lending focus, in addition to the corporate and deposit franchise, the veteran banker said in his message at the 2020-21 annual report.

"Home loans give us an opportunity to build a longer-term relationship with customers. And we will get bolder in unsecured retail finance too, for which we’ve kept our powder dry over the last two years," Kotak said.

Kotak Mahindra Bank on July 26 reported a 32 percent year-on-year (YoY) jump in standalone Q1FY22 net profit at Rs 1,641.92 crore against Rs 1,244.45 crore in Q1FY21.

The number was slightly above a CNBC-TV18 poll of analysts which had estimated the bank's Q1 profit at Rs 1,595.5 crore for the quarter.
 Net interest income (NII) for Q1FY22 increased 6 percent YoY to Rs 3,942 crore, from Rs 3,724 crore in Q1FY21. Net interest margin (NIM) for the said quarter stood at 4.60 percent.


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Kotak said the bank will not shy away from taking bolder bets. “We have a deep conviction in the India growth story and confidence in our risk management capabilities. And we believe the time is right to experiment more, concentrate on segments that we deem offer the best opportunities for returns and, in the process, support the Indian economy by extending credit, while at the same time providing safety to our depositors,” Kotak said.

In Q1, Kotak Mahindra’s gross NPAs stood at 3.56 percent against 3.25 percent on a sequential basis whereas the net NPA came at 1.28 percent from 1.21 percent. “Fresh NPA formation was higher at Rs15 billion (3 percent of loans), mainly due to higher stress in secured products such as CV/CE and mortgage,” said Anand Dama of Emkay Global.

These numbers are in line with the trend shown by other banks - HDFC Bank, ICICI Bank and big NBFCs such as Bajaj Finance (auto loan NPAs of 19.15 percent against 9.31 percent in the March quarter of FY 2021 and just 5.8 percent in the year-ago period), L&T Finance and M&M Finance (where GNPAs rose to 15.5 percent against 9 percent last year).


Kotak said the ambition is to continue to build on their vision of a world-class financial services institution that delivers long-term sustainable returns for all its stakeholders. “With that in mind and against the backdrop of the pandemic, you will see a significant shift in our approach, one of greater aggression, one that is even sharper on execution,” Kotak said.

Further, Kotak said the bank has a deep conviction in the India growth story and confidence in the bank’s risk management capabilities.

“And we believe the time is right to experiment more, concentrate on segments that we deem offer the best opportunities for returns and, in the process, support the Indian economy by extending credit, while at the same time providing safety to our depositors,” Kotak said.

Uday Kotak further said that the bank is ready for a phase of faster growth “but on our terms”. Also, the bank will make higher investments in strengthening the digital and technology platforms and offerings, the CEO said.

“The future may be uncertain, but we can be confident that it belongs to technology. What was once a support function to business, is now the epicentre around which our businesses will revolve,” Kotak said.

The comments are significant in the backdrop of central bank governor’s repeated messages that banks have to invest in technology platforms to make sure capability.

Dinesh Unnikrishnan is Deputy Editor at Moneycontrol. Dinesh heads the Banking and Finance Bureau at Moneycontrol. He also writes a weekly column, Banking Central, every Monday.
first published: Jul 29, 2021 09:03 pm
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