Kotak Mahindra Bank has recorded an increase in unsecured retail loans during the April-June quarter, when compared with the year-ago period, with credit card outstanding and microfinance loans surging aggressively.
Retail unsecured loans of Kotak Mahindra Bank reached 10.7 percent of the total loan book as at the end of June 2023 from 7.9 percent a year back, according to an investor presentation by the private sector lender.
Retail microfinance loans surged 91 percent over last year, while credit card outstanding jumped 67 percent.
Retail microloans are given to low-income groups who are typically small businessmen and vendors. These loans are a tricky segment for banks as cash flows typically take a hit during a downcycle. The trend is in line with the industry where banks are stepping up lending to unsecured loans post Covid.
Among other credit segments, home loans grew by 18 percent in the quarter while loans to small and medium enterprises grew by 16 percent, the data showed.
Also, corporate loans grew by 9 percent on a year-on-year basis, the data showed. Overall, net advances of the bank increased 17 percent over the last year.
In recent months, the jump in the unsecured loan books of banks has worried analysts who have cautioned that these loans can go bad in the event of a prolonged economic downturn.
Kotak Mahindra Bank on July 22 reported a 50.62 percent year-on-year rise in its consolidated profit at Rs 4,150.19 crore for the first quarter of the current financial year.
On a standalone basis, net profit surged 66.7 percent on-year to Rs 3,452.30 crore, beating analysts' expectation of a 53 percent growth at Rs 3,182 crore. In the year-ago quarter, the Mumbai-based private sector lender reported a standalone net profit of Rs 3,495.59 crore.
On the asset quality front, the lender saw an improvement in the first quarter, with gross non-performing asset (NPA) declining to 1.75 percent from 2.27 percent in the year-ago period. Net NPA fell to 0.43 percent against 0.41 percent in the previous quarter and 0.69 percent in a year-ago period.
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