Kotak Mahindra Bank Q2 Review - Pushing The Growth Pedal: Dolat Capital

Dolat Capital Report

Kotak Mahindra Bank Ltd. reported industry best sequential loan growth at 8% QoQ and limited incremental restructurings at 0.5%.

Net Interest Income growth, however, was muted at 3% YoY reflecting pick-up in growth towards latter half of the quarter.

Net Interest Margin declined to 4.45% reflecting changing loan mix towards lower yielding assets (HL/wholesale).

Asset quality trends were healthy with gross slippages at 2.4%, 250 bps rise in PCR to 67.5%, and limited restructurings at 0.5% of loans. Gross NPAs declined by 37 bps QoQ to 3.19%, and benefitted from strong loan growth and negligible net slippages. Standard provision buffers continue to remain unutilised at Rs12.8 billion or 0.5% of advances. Management alluded that behavior of ECLGS portfolio has been in line with rest of book. 

Loan growth momentum was sequentially strong across segments including Home Loans (11%), Corporate (9%), SME (8%), and unsecured PL/CC (10%). With increased confidence on growth, we raise growth estimates for FY22E to 22% and FY23E/24E to 20%. Management seemed confident of strong growth in unsecured/BB book supporting NIMs for the bank.

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