Credit card stress still high, expect to reduce in few mos, says Kotak Bk MD
This story was originally published at 21:38 IST on 3 May 2025
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--Kotak Bank MD: Stress in credit card business remains elevated
--CONTEXT: Comments by Kotak Bank's mgmt in post-earnings press conference
--Kotak Bank MD: Stress in credit card business should start coming down
--Kotak Bank MD:Mindful of evolving geopolitical issues, assessing portfolio
--Kotak Bank: Will see some pressure on NIM in near term
--Kotak Bank: Not seeing any slowdown in transaction banking business
--Kotak Bank MD: Aim unsecured personal assets to form 15% of total assets
--Kotak Bank MD: Plan to to keep credit-deposit ratio at 85-87%
--Kotak Bank MD: To reach pre-embargo credit card issuances in 6 mos
By Kshipra Petkar and Cassandra Carvalho
MUMBAI – Stress in Kotak Mahindra Bank's credit card book is still high but is expected to come down in a few months, Managing Director and Chief Executive Officer Ashok Vaswani said at a post-earnings press conference Saturday. The bank's management said delinquencies in the credit-card book are stable and not rising.
On the sidelines of the press conference, Vaswani said the bank aims to reach the pre-embargo level of credit-card issuances in the next six months. In February, the Reserve Bank of India lifted the restrictions that it had imposed on the bank in April 2024 on issuing new credit cards and onboarding new customers digitally. Before the embargo, Kotak Mahindra Bank was adding around 88,000 credit cards a month, according to RBI data.
Vaswani said the lifting of the embargo was "a burden off my back" and the bank now aims to increase the share of unsecured retail advances, including retail microcredit, to net advances to 15.0%, from 10.5% at present. Shanti Ekambaram, the bank's deputy managing director, said that despite the RBI's embargo, the bank had not seen a fall in transactional banking business.
Kotak Mahindra Bank has launched a new product called Solitaire, targeted at affluent customers. The Solitaire credit card is expected to improve the bank's market share in the segment. The bank's credit card book fell 7% on year in the March quarter to INR 134.20 billion.
The bank reported fresh slippages of INR 14.88 billion in the quarter, lower than INR 16.57 billion reported in the December quarter. Its gross non-performing asset ratio stood at 1.42% as of Mar. 31, as compared to 1.50% a quarter ago. The net non-performing asset ratio atood at 0.31%, compared to 0.41% as of Dec. 31.
Vaswani said the bank's management remains mindful of current geopolitical issues and is constantly assessing its portfolio in that light, but added that the bank is not seeing any signs of stress from any book. He said that with the RBI likely to cut the repo rate further, margins are likely to come under pressure in the near term. Devang Gheewala, the group chief financial officer, said margins could eventually improve with the unsecured book growing. In Jan-Mar, the bank reported a net interest margin of 4.97%, up from 4.93% in Oct-Dec.
Vaswani said the bank aims to grow its credit to a level that is 1.5-2.0 times the nominal GDP and keep the credit-deposit ratio at 85-87%. As of Mar. 31, the ratio stood at 85.5%.
India's fourth-largest private-sector lender reported a decline of over 14% on year in net profit for the March quarter as provisions jumped over threefold from a year ago. The net profit for the quarter under review was INR 35.52 billion, up 7.5% sequentially and marginally lower than analysts' expectation of INR 35.66 billion. Provisions during Jan-Mar were INR 9.09 billion, as compared with INR 2.64 billion a year ago. Sequentially, the provisioning was up nearly 15%.
On the National Stock Exchange, shares of Kotak Mahindra Bank fell 1% to INR 2,185.20 Friday. The bank released its results Saturday. End
Edited by Rajeev Pai
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