Kotak Mahindra Bank Limited is Indian banking also is financial services company headquartered in the city of Mumbai and India that offers banking products and financial services for corporate.
And retail customers in the areas of personal finance and investment banking, life insurance, wealth management.
Third largest private sector bank by assets and by market capitalization as of November 2021 in India. There was occurs a net provision write-back as the bank chose to utilize part of COVID-19 provisions which drove net income growth.
Bank has taken in Jan-22 15bps retail deposit rate hike in the 180 days-2 year bucket. Asset quality held up Gross NPA declined 48bp q-o-q to 2.71% Restructured assets were up 8% q-o-q and remain at 0.5% of loans.
As of February 2021, the bank has 1600 branches and 2519 ATMs Consolidated loans grew 18.4% y-y (+8.2% q-o-q) with the standalone bank at +18.1% y-o-y (7.6% q-o-q) – acquisition of Ford and Volkswagen loans helped.
Results cards grew faster, while vehicle and wholesale loans reported moderate growth. Management indicates stronger organic growth in unsecured segments going forward. CASA growth at 17% y-o-y remains weak vs.
Other frontline banks. NIM improved 17bps q-o-q to 4.62%. SMA2 was at 12bp of loans. Slippages at Rs 7.5 were in line. Provisions, in general, are 91bps of loans which include a balance COVID-19 provision of 40bps.
Lower provisions drove net income: Consolidated net income grew ~31% y-o-y, driven by 68% y-o-y growth aggregate net income is all subsidiaries moderated by 15% y-o-y growth for the standalone bank.
Standalone core PPOP was up 3.5% y-o-y (inline) while PPOP was down 7% y-o-y owing to 33% y-o-y growth in expenses.
Then, the growth pedal is pushed which is distorting the expense ratio, should stabilize within a few quarters.
The bank had an MTM loss of 5rs bn accounted under other income (risk of running aggressive trading book and interest rates going against the trade).
Change in estimates; remain Neutral lower our TP to Rs 2,060 and value the stock at 4x P/B. Also while the stock has time-corrected and it still remains expensive for the roe it delivers.
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