Stock of the day report

1. 26 September 2019
Kotak Mahindra Bank

2. 1
Consolidated Quarterly Performance:
•The bank has reported 23% increase in the net profit at rs 1932.21 crore, with the NII growth of 22% to rs
4159.12 crore in the quarter ended june 2019. Non-interest income increased 27% to rs 3815.37 crore and
net total income moved up 25% to rs 7974.49 crore in the quarter ended june 2019.
•Kotak Prime has reported 10% yoy improvement in the net total income at Rs 362 crore for
Q1FY2020, while net profits increased 10% to Rs 153 crore. Total customer assets declined 1% yoy to Rs
27749 crore at end June 2019. Car advances constituting 70.5% of the total customer assets fell 4% to Rs
19554 crore. Asset quality has deteriorated with %NNPA rising to 0.54% at end June 2019 from 0.39% at
end June 2018.
•Kotak Mahindra Life Insurance has reported 42% increase in the gross premium collection to Rs 1640 crore
in Q1FY2020. PAT increased 15% to Rs 134 crore in Q1FY2020. Solvency ratio eased to 3.02% in Q1FY2020
against 3.11% in Q1FY2019.
•The expense ratio was higher at 59.1% and tax rate at 33.9% in the quarter ended June 2019.
•Kotak Mahindra AMC and Trustee Co reported 25% surge in Average AUM at Rs 161339 crore in the
quarter ended June 2019. The net profit of the company jumped 43% to Rs 73 crore in Q1FY2020.
•Book Value per share stood at Rs 315.4 per share at end June 2019, while adjusted book value (net of
NNPA) stood at Rs 306.4 per share at end June 2019.
Standalone Business Highlights
• The business level of the bank increased 20% yoy to Rs 440961 crore at end June 2019. The deposits moved
up 23% to Rs 232931 crore, while advances increased 18% to Rs 208030 crore at end June 2019.
• The credit-deposit ratio eased to 89.31% at end June 2019 from 91.06% a quarter ago. Home loans & LAP
loans increased 24%, while small business and personal loans also increased 29% at end June 2019 over
June 2018.
• The commercial vehicle & construction equipment (CV&CE) loan increased 24% and agriculture loans
22%, while corporate and business banking loan rose 7% end June 2019 over June 2018.
• The CASA deposits ratio of the bank was healthy at 50.71% at end June 2019 3 compared with 52.50% a
quarter ago and 50.26% a year ago. The cost of saving account deposits declined to at 5.51% at end June
2019.
Kotak Mahindra Bank

3. 1
Kotak Mahindra Bank Ltd.’s profit rose in the quarter ended June
• Kotak Mahindra Bank (KMB), on a standalone basis, reported robust 33% growth in
Net Profit to Rs 1360.20 crore in the quarter ended June 2019 (Q1FY2020) over the
corresponding quarter of last year. The bank has maintained stable asset
quality, while further improved its net interest margins (NIMs) in Q1FY2020. NIMs of
the bank have improved to 4.49% in Q1FY2020 compared with 4.48% in the
previous quarter and 4.28% in the corresponding quarter last year.
• The cost-to-income rate has improved to 46.43% in Q1FY2020 from 47.15% in the
previous quarter, while it rose from 45.76% in the corresponding quarter last year.
The credit cost (NPA provisions as an annualized percentage of loans) declined to
0.52% in Q1FY2020 from 0.59% in Q1FY2019. However, the bank exhibited some
moderation in loan growth to 18% at end June 2019. The business growth of the
bank was steady at to 20% at end June 2019.
Sum Of The Parts Analysis
Kotak Mahindra Bank

4. 2
Kotak Mahindra Bank
Liabilities’ Growth Healthy
Deposit traction (+23/3%) was healthy, with sequential growth driven by TDs (+7%, similar trends seen at peers
in 1Q, so far). As CASA deposit were sequentially flat (+24% YoY), their share dipped ~180bps QoQ to 50.7%. SA
growth (+23/2%) did not seem to be impacted by the rate cut in Jun-19 (preceded by a rate cut in 4Q as well).
More conducive e-KYC norms (likely fresh legislative output) and the resumption of 811 will boost SA
mobilization (albeit smaller and less sticky).
The bank profits fell marginally QoQ. KMP’s advances (Rs 277bn) were flat (YoY and QoQ) with a 4% drop in
core car loans. The continuance of this trend over a long period remains inexplicable. KMP witnessed a
~38/20% rise in NNPAs (54bps). Kotak Mahindra Capital’s PAT nearly doubled YoY/QoQ to ~Rs 450mn resulting
from a string of capital mkt deals in 1Q. K-AMC reported avg AUMs of ~Rs 1.61tn (+17% over FY19 levels) and
registered a PAT of ~Rs 730 mn (flat QoQ). K-sec’s net earnings were flat QoQ (down 15% YoY) with 4% rise in
total income (flat YoY)
Deposits and CASA Growth
Financial Summary

5. 4
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