Slowing on Growth: With management’s slow economic growth scenario
materializing, Kotak has moderated growth targets significantly to ~20% v/s
+30% growth delivered over the last few qtrs with significant slowdown in CV/CE
portfolio. Core fee income will also moderate but kotak expects to monetise fee
assets in their distressed portfolio and that could aid P&L over next 12mnts.
Momentum on SA acquisition strong: SA account accretion continues at a brisk
pace with ~40-45% of the acquisition being coroprate salary accounts. Kotak
believes that even at ~100bps lower term deposit rates from current levels, they
would be willing to hold on their SA rate of 6% as once acquired balances are
generally sticky and SA offers them a signifcant cross sell oppurtunity.
Asset quality ‐ Extremely cautious on CVs: Kotak has been sounding caution on
CVs for the last 3 mnts but management commentary on CV cycle was more
draconian now especially considering an impending diesel price hike. Kotak
expects some negative outcome for mid level fleet operators over the nest
6mnts. Kotak’s corporate book asset quality is manageable but is very
concerned on some industry Infra exposures.
Asset quality‐ Very early in picking up weaking signal in SME/corporates: Kotak
discussed that their ability to exit problem accounts early is linked to (1) Smaller
size of their exposure in most corporates (2) short term nature of their funding
and (3) Cashflow escrowing in most cases.
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