Kotak Mahindra Bank Ltd (BOM:500247) Q2 2025 Earnings Call Highlights: Strong Profit Growth ...

GuruFocus News
4 min read

In This Article:

  • Group Profit After Tax: INR 5,044 crores, up 13% YoY.

  • Deposit Growth: 16% YoY.

  • Asset Growth: 18% YoY.

  • CASA Ratio: 43.6%.

  • Consolidated Network: INR 147,000 crores.

  • Book Value Per Share: INR 740, up 22% YoY.

  • Capital Adequacy Ratio: 22.6% at group level.

  • Return on Equity (ROE): 13.88%.

  • Return on Assets (ROA): 2.53%.

  • Bank's Profit After Tax: INR 3,344 crores, 5% YoY growth.

  • Net Interest Margin (NIM): 4.91%, down 11 bps.

  • Gross NPA: 1.49%.

  • Net NPA: 0.43%.

  • Credit Cost: 65 bps annualized.

  • Kotak Securities Profit: INR 444 crores, 37% YoY growth.

  • Kotak AMC Profit: INR 197 crores, 60% YoY growth.

  • International Subsidiaries Profit: INR 76 crores, 84% YoY growth.

  • Kotak Life Profit: INR 360 crores, 46% YoY growth.

  • Asset Management AUM: INR 4.7 trillion, 41% YoY growth.

  • Total AUM Market Share: 7.1%.

  • SIP Inflows: INR 17.6 billion, 23% YoY growth.

  • Total Assets Under Management: INR 6.8 trillion, 37% YoY growth.

Release Date: October 19, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Kotak Mahindra Bank Ltd (BOM:500247) reported a group profit after tax of INR 5,044 crores for Q2 FY25, marking a 13% year-on-year increase.

  • The bank's Capital Markets, Asset Management, and Insurance segments each grew over 50% year-on-year, showcasing strong performance across multiple business lines.

  • Deposits grew by 16% year-on-year, with a CASA ratio stabilizing at 43.6%, which is considered industry-leading.

  • The bank made significant progress on the technology front, including the beta launch of a new customer-facing mobile app.

  • Kotak Mahindra Bank Ltd (BOM:500247) maintained a strong capital adequacy ratio at the group level of 22.6%, with CET1 at 21.7%.

Negative Points

  • The bank experienced a dip in its retail unsecured asset business, with its share dropping slightly to just over 11%, partly due to a tech embargo affecting the credit card business.

  • There was a noted increase in credit stress within the credit card business due to overleveraging by certain customers.

  • The bank's net interest margin (NIM) decreased by 11 basis points to 4.91% due to a shift towards secured assets.

  • The microfinance sector experienced a 4% degrowth, with expectations of continued stress over the next two to three quarters.

  • The bank is under a supervisory action by the RBI, which includes restrictions on digital onboarding, impacting growth in certain segments.

Q & A Highlights

Q: Can you elaborate on your objective to become the #3 private bank in India and the growth strategy to achieve this? A: Ashok Vaswani, CEO, explained that the goal is set for the next five years, focusing on both organic and inorganic growth. The immediate priority is to fix the technology estate. Investments in technology are being made to enhance customer experience and scale. The bank plans to manage margins by aligning rates and growing high-yielding books like unsecured retail and rural finance once the embargo is lifted.

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