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Kotak Mahindra Bank (KTKM.BO; RS445.00; 1M)
Takeaways from Mumbai – Kotak Mahindra Bank presented at our India
conference in Mumbai today. Below are key highlights:
Financing segments likely to remain key focus - Kotak's financing businesses
have increased substantially over the last 3-4 years in terms of revenues and
profits. Management expects growth to continue to remain strong in the medium
term, though there is likely to be a moderation due to the current higher rate
environment. FY12 loan growth is likely to be around 30% levels (relative to 40%
in FY11). Key drivers of growth are likely to be its continued shift towards higher
corporate and commercial banking segments.
Net interest margins to moderate to around 5% medium term - Kotak's NIMs
have been under pressure over the last few quarters, both structurally and
cyclically due to a shift in loan mix to more (lower yielding) corporate assets as
well as rising cost of funding - management expect NIMs to stabiliize close to 5%
levels medium term -should still remain well ahead of industry levels.
Asset quality to remain healthy - Management does not see any signs of
deterioration in asset quality, across segments - both retail and corporate.
Believes credit costs can remain relatively low in the current year, despite
concerns on the macro as incremental slippages remain modest. Capital market
segments remain sluggish - Kotak's capital market segments have seen
increased competition and lower profitability levels, we believe these trends are
likely to continue over the medium term and will be a profitability drag. However,
the life insurance segment is performing quite profitably and is among the highest
efficiency on capital utilization in the industry.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Kotak Mahindra Bank (KTKM.BO; RS445.00; 1M)
Takeaways from Mumbai – Kotak Mahindra Bank presented at our India
conference in Mumbai today. Below are key highlights:
Financing segments likely to remain key focus - Kotak's financing businesses
have increased substantially over the last 3-4 years in terms of revenues and
profits. Management expects growth to continue to remain strong in the medium
term, though there is likely to be a moderation due to the current higher rate
environment. FY12 loan growth is likely to be around 30% levels (relative to 40%
in FY11). Key drivers of growth are likely to be its continued shift towards higher
corporate and commercial banking segments.
Net interest margins to moderate to around 5% medium term - Kotak's NIMs
have been under pressure over the last few quarters, both structurally and
cyclically due to a shift in loan mix to more (lower yielding) corporate assets as
well as rising cost of funding - management expect NIMs to stabiliize close to 5%
levels medium term -should still remain well ahead of industry levels.
Asset quality to remain healthy - Management does not see any signs of
deterioration in asset quality, across segments - both retail and corporate.
Believes credit costs can remain relatively low in the current year, despite
concerns on the macro as incremental slippages remain modest. Capital market
segments remain sluggish - Kotak's capital market segments have seen
increased competition and lower profitability levels, we believe these trends are
likely to continue over the medium term and will be a profitability drag. However,
the life insurance segment is performing quite profitably and is among the highest
efficiency on capital utilization in the industry.
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