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Kotak Mahindra Bank
F4Q11: Ahead of
Expectations
Quick Comment – Kotak Mahindra Bank reported a
PAT of Rs4.9bn at the consolidated level (+28% QoQ,
17% YoY) ahead of our estimate of Rs4.2bn. The
beat was driven by higher than expected earnings at the
banking, investment banking and life insurance
businesses. This was partially offset by lower than
expected earnings in the brokerage business.
Bank earnings were up Rs2.5bn (+32% QoQ, +23%
YoY):
- NII was up 9% QoQ, 18% YoY as computed margins
ticked up 8 bps QoQ. As per management, this was on
account of higher yield on advances owing to change in
mix (owing to seasonal shift in loan mix towards the
consumer segment).
- Loan book grew by 2% QoQ, 41% YoY. Deposits were
up 3% QoQ, 23% YoY. CASA ratio moved higher QoQ
to 30% from 27.8% in F3Q11.
- They wrote back provisions to the Rs72mn for the
quarter. Asset quality trends improved at the bank driven
by strong recoveries – hence, they wrote back some
past provisions. Gross NPLs were down -19% QoQ.
Gross NPL ratio moved lower to 2% from 2.5% in F3Q11.
Reported coverage moved lower QoQ to 70.1% from
72% in F3Q11. Coverage (ex tech w/offs) moved lower
to 65% from 68.3% in F3Q11.
Kotak Prime reported a PAT of Rs 869 mn (-7% QoQ,
+48% YoY): Loan growth was robust at 7% QoQ, +34%
YoY.
Kotak Securities reported a PAT of Rs362mn (-22%
QOQ, -29% YoY): Profits were weak as cash volumes
trended lower QoQ. Market share in avg. daily volume
traded came off to 3.4% for F2011 vs 3.7% for F9M11
and 4.1% for F2010. The investment banking business
however was strong with Kotak Mahindra Capital
company recording a profit of Rs300mn (+294% QoQ,
+125% YoY).
Kotak Mahindra AMC reported a profit of Rs36mn
(-51% QoQ, -76% YoY) as share of equity in total AUMs
moved lower to 11.8% from 14.5% in the previous quarter
and distribution expenses were higher sequentially.
Domestic MF AUM were up 17% QoQ but were down 7%
YoY. The sequential increase was driven by debt fund
AUMs which were up 21% QoQ.
The Life Insurance business reported a profit of
Rs712mn (+202% QoQ, +60% YoY). The strength was
driven by good traction on the traditional product sales
during the quarter.
Maintain UW: Volume growth trends in the lending
businesses were robust during the quarter and strength in
investment banking and life insurance helped bottom-line
progression. However, we maintain our UW on the stock on
valuation (trading at 17.9x F2012 earnings and 2.8x F2012
BV). Please refer to our recent report dated May 2, 2011
“Coming Collapse of Margins”, in which we downgraded
our India Financial Services industry view to Cautious.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Kotak Mahindra Bank
F4Q11: Ahead of
Expectations
Quick Comment – Kotak Mahindra Bank reported a
PAT of Rs4.9bn at the consolidated level (+28% QoQ,
17% YoY) ahead of our estimate of Rs4.2bn. The
beat was driven by higher than expected earnings at the
banking, investment banking and life insurance
businesses. This was partially offset by lower than
expected earnings in the brokerage business.
Bank earnings were up Rs2.5bn (+32% QoQ, +23%
YoY):
- NII was up 9% QoQ, 18% YoY as computed margins
ticked up 8 bps QoQ. As per management, this was on
account of higher yield on advances owing to change in
mix (owing to seasonal shift in loan mix towards the
consumer segment).
- Loan book grew by 2% QoQ, 41% YoY. Deposits were
up 3% QoQ, 23% YoY. CASA ratio moved higher QoQ
to 30% from 27.8% in F3Q11.
- They wrote back provisions to the Rs72mn for the
quarter. Asset quality trends improved at the bank driven
by strong recoveries – hence, they wrote back some
past provisions. Gross NPLs were down -19% QoQ.
Gross NPL ratio moved lower to 2% from 2.5% in F3Q11.
Reported coverage moved lower QoQ to 70.1% from
72% in F3Q11. Coverage (ex tech w/offs) moved lower
to 65% from 68.3% in F3Q11.
Kotak Prime reported a PAT of Rs 869 mn (-7% QoQ,
+48% YoY): Loan growth was robust at 7% QoQ, +34%
YoY.
Kotak Securities reported a PAT of Rs362mn (-22%
QOQ, -29% YoY): Profits were weak as cash volumes
trended lower QoQ. Market share in avg. daily volume
traded came off to 3.4% for F2011 vs 3.7% for F9M11
and 4.1% for F2010. The investment banking business
however was strong with Kotak Mahindra Capital
company recording a profit of Rs300mn (+294% QoQ,
+125% YoY).
Kotak Mahindra AMC reported a profit of Rs36mn
(-51% QoQ, -76% YoY) as share of equity in total AUMs
moved lower to 11.8% from 14.5% in the previous quarter
and distribution expenses were higher sequentially.
Domestic MF AUM were up 17% QoQ but were down 7%
YoY. The sequential increase was driven by debt fund
AUMs which were up 21% QoQ.
The Life Insurance business reported a profit of
Rs712mn (+202% QoQ, +60% YoY). The strength was
driven by good traction on the traditional product sales
during the quarter.
Maintain UW: Volume growth trends in the lending
businesses were robust during the quarter and strength in
investment banking and life insurance helped bottom-line
progression. However, we maintain our UW on the stock on
valuation (trading at 17.9x F2012 earnings and 2.8x F2012
BV). Please refer to our recent report dated May 2, 2011
“Coming Collapse of Margins”, in which we downgraded
our India Financial Services industry view to Cautious.
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