Kotak Mahindra Bank conducted a conference call on 04 May 2024 to discuss its financial results for the quarter ended March 2024. Ashok Vaswani, MD&CEO of the bank addressed the call:

Highlights:

The customer assets of the bank have increased 22% to Rs 4.79 lakh crore end March 2024.

The capital adequacy ratio was healthy at 19.82% end March 2024. The bank has redeemed preferential capital in Q4, so the entire capital is CET I.

The bank added 93 lakh customers in FY 2024 of which 24 lakh customers were added in Q4Y2024.

The company has completed acquisition of Lucknow based Sonata Microfinance which has presence over 610 branches in 155 districts spread in MP, UP, Bihar and northern India.

With the acquisition of Sonata Microfinance, the presence of the microfinance segment of the bank has expanded to 16 states with customer base rising to 27 lakh women customers.

The bank has written off Rs 1455 crore of retail unsecured loans which were fully provided

Kotak Securities and Kotak capital perform exceedingly well in FY2024 driven by tailwinds from the good market.

In the wholesale banking, the bank has witnessed healthy pick up in the loan demand with higher new to bank customer addition and deepening customer relations.

The customer addition in the mid market segment was two times in FY2024 than in FY2023.

The commercial vehicle segment has recorded robust 46% surge in the disbursements in Q4 helping to gain market share.

The construction equipment disbursement have also jumped 47% driven by the infrastructure spend and helping to gain the market share. The bank expects to continue the maintain growth momentum ahead.

The tractor industry was muted, but the loan book of the bank was steady with stable market share.

The year FY2024 was a strong year for the investment banking segment with 18 IPO and secondary capital raise.

The year was also strong for the advisory business with record high revenues in FY2024.

Investment banking business revenues have surged 33% to  Rs 432 crore in FY2024. The pipeline for FY2025 continues to be strong.

The revenues of Kotak securities have jumped 78% in Q4FY2024 and 33% in FY2024, driven by substantial growth in the cash market volumes in the industry. It has also achieved highest ever net profit in FY2024. Kotak Securities has maintained cash market share while exhibited substantial improvement in the derivative market share.

The bank remains focused on raising the share of unsecured loans to 15%.

The bank expects moderate rise in cost of funds ahead.

The bank added 150 branch is FY2024 and targets to add similar 150 branches in FY2025.

The bank is targeting loan growth of 1.5 to 2 times of nominal GDP growth. Once the banks business gets back to normal it may became aggressive on the growth.

RBI ban on digital customer acquisition and credit card issuance

RBI has put the restriction on banks new customer acquisition through digital channel such as 811 and mobile banking, while there is also restriction on issuance of new credit cards.

Bank is in dialogue with the RBI for seeking their guidance on meeting the expectations on tech side.

The bank has stopped acquisition of new customers on digital channel and issuance of new credit cards. The bank has decided focus on strengthening and nurturing the relationship with the existing customers.

The company has accelerated its technology strategy. IT spends of the bank has jumped 30% from  Rs 1300 crore in FY2023 to  Rs 1700 crore in FY2024 and forms 10% of the overall expenses of the bank, while it expects strong growth in IT spend for FY 2025.

As per the bank, there is no impact of the RBI order on any segments.

The top priority of the bank is to get business back to as usual as early as possible.