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Informist, Saturday, Jan. 18, 2025

 

--Kotak Bk: Hope to complete StanChart Bk personal loan acquisition this qtr

--CONTEXT: Comments by Kotak Bank's mgmt in post-earnings analyst call
--Kotak Bank: Existing NPA collection remains challenging on ground 
--Kotak Bank on RBI embargo: In constant communication with RBI 
--Kotak Bank: Difficult to predict when will RBI lift embargo 
 

MUMBAI – Kotak Mahindra Bank expects to complete the acquisition of the personal loan book of Standard Chartered Bank sometime in the ongoing quarter, the bank's management said at a post-earnings analyst call. 

 

The bank entered into an agreement with Standard Chartered Bank India to buy out its personal loan book worth INR 41 billion in October.

 

"The advances for the current quarter do not include the Standard Chartered personal loan book which the bank had disclosed earlier. The bank has received all the approvals and we are in the process of migration. We expect this to be completed shortly during this quarter," the bank's management said.

 

In November, the Competition Commission of India had approved the acquisition of the standard unsecured personal loans portfolio of Standard Chartered Bank, India Branch, by Kotak Mahindra Bank. The unsecured retail mix of Kotak Mahindra Bank slowed down to 10.5% during the reporting quarter due to lower disbursements in the microcredit and credit card growth, which continues to be impacted due to the restrictions placed by the Reserve Bank of India, the management said.

 

On Saturday, the bank reported a net profit of INR 33.05 billion, up nearly 10% on year, for the quarter ended December. The net interest income of the bank rose 10% on year to INR 71.96 billion for the reporting quarter. 

 

 

On the Reserve Bank of India's action on the bank to cease and desist from on-boarding new customers on their online and mobile banking channels and stop issuing fresh credit cards, the management said that they are in constant communication with the RBI.

 

"The conversations have been helpful and they have provided us guidance. It is very hard to predict at what stage the RBI will lift the ban, I honestly don't know," Ashok Vaswani, managing director and the chief executive officer said in the post-earnings analyst call.

 

The RBI had said it noted serious deficiencies and non-compliances by the private sector bank in information technology inventory management, patch and change management, user access management, vendor risk management, data security and data leak prevention strategy, business continuity and disaster recovery rigour and drill.

 

He said that the credit card book, which has degrown for the bank sequentially by 2% in the reporting quarter, is not the best place to be in. "I would have liked to grow our credit card book, our credit card book has not grown at all. Our stated desire was to have our unsecured book, which is credit cards, personal loans and microfinance, at about 15% of our total assets, and we've dropped to about 10.5%. I wish this had not happened."

 

He added that the ban has also affected the Kotak 811 product, which is an online savings account and helps to build low-cost granular deposits for the bank and is very valuable at this time. "Definitely, the embargo has hurt, and I am hoping we get out of this embargo soon so that we can get back to our ways," he said.

 

On slippages, the bank said that they will remain watchful of the slippages going forward, but as of today, the bank said that the personal loan slippages are tapering down, credit cards see a plateau, but micro-credit continues to rise. "We will have to see the trend on this for a few more quarters before commenting on this," the management said. The bank added that the collection from the existing non-performing assets still remains a challenge on ground. Fresh slippages in the reporting quarter stood at INR 16.57 billion, which is lower than INR 18.75 billion seen a quarter ago.

 

On the National Stock Exchange, the shares of Kotak Mahindra Bank closed 2.6% lower at INR 1,758.60 on Friday.  End

 

Reported by Kshipra Petkar

Edited by Akul Nishant Akhoury

 

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