Kotak Mahindra: India’s Best Capitalised Bank
Kotak Mahindra Bank’s capital adequacy ratio is at the highest In 14 quarters
Uday Kotak would be the envy of a number of bank chiefs in India. The lender that bears his name - Kotak Mahindra Bank - is currently among the best positioned to grow organically or inorganically going by the level of capital on its books.
Earnings released by Kotak Mahindra Bank on Thursday show that its capital adequacy ratio jumped to 19.2 percent as on 30 June 2017. A Rs 5,803 crore qualified institutional placement (QIP) issue completed in May along with a 23 percent growth in profit push up the capital adequacy ratio by more 2 percentage points in the April-June quarter.
At 19.2 percent, Kotak Mahindra Bank’s capital adequacy ratio is now the highest among the larger private sector banks including HDFC Bank, ICICI Bank, Axis Bank, Indusind Bank and Yes Bank. ICICI Bank comes closest with a capital adequacy ratio of 17.4 percent as of March 2017. ICICI Bank is yet to announce earnings for the June quarter.
Kotak Mahindra Bank’s capital adequacy ratio is also the highest in 14 quarters. The last time its capital ratio touched 19.2 percent was in the December 2013 ended quarter. Soon after that Kotak Mahindra Bank acquired ING Vysya Bank.
To be sure, the lender has not suggested that it is actively pursuing any acquisitions at this stage but Uday Kotak has said that he remains open to inorganic growth opportunities. Earlier this year, the markets were rife with speculation that Kotak Mahindra Bank is interested in acquiring the government’s stake in Axis Bank, held via the Specified Undertaking of Unit Trust of India (SUUTI).
Kotak neither confirmed nor denied the rumors. “If SUUTI decides to offer, our board will look at the merit and evaluate it,” Kotak told Times of India in an interview on April 5.
Apart from pursuing inorganic expansion, Kotak Mahindra Bank’s strong capital adequacy also puts the lender in a good spot to capture any pick-up in credit demand in the economy. The bank’s loan book stood at Rs 1,42,359 crore at the end of the June quarter, 17.8 percent higher compared to a year ago.
