“Not saying no to any of those growth avenues but certainly not on this one,” said Jaimin Bhatt, group CFO, Kotak Mahindra Bank. “When we raised capital in the first quarter of this year, we did talk about the fact that we will look at acquisitions, whether it is companies or assets.”
The bank which raised more than Rs 7500 crore through a QIP route in May this year said it has enough capital cushion to explore inorganic opportunities.
“Right now, that is cushion of capital. We will have to get into, whether it is right opportunities, whether it is growing on the organic track,” Bhatt added. “As we see green-shoots coming in, we will be open to growing advances book also. We have all the building blocks ready to be growing. Having capital is cushion but we will use it judiciously.”
Bloomberg had reported that Uday Kotak is exploring an all-stock acquisition and has held initial talks over the proposal in which the founders of IndusInd Bank could retain a stake in the lender after a deal.
Private lender IndusInd Bank had denied having any exploratory take-over talks with peer Kotak and said it has unstinted support from its promoters, the Hinduja family.
“IndusInd Bank categorically denies any such developments, its malicious and incorrect,” the bank had said in an email response. “The Promoter of IndusInd Bank, IndusInd International Holdings Limited (IIHL), reiterate their full support to the IndusInd Bank, now and always.”
Kotak Mahindra Bank on reported a 27% rise in profits to Rs 2184 crore at the end of the September quarter on the back of high returns from its investment book. The bank had reported a profit of Rs 1724 crore same period a year ago.
Net Interest Income (NII) – the difference between interest earned and expended grew 17% to Rs 3913 crore versus Rs 3350 crore a year earlier. Net interest margin (NIM) was at a healthy 4.52%.
The lender continued with its conservative stance on expanding the book and saw its advances degrow by 4% to Rs 2.04 lakh crore at the end of September as against Rs 2.13 lakh crore last year.
“We have chosen market linked growth at this point in time cause earnings growth is important to us, as and when the credit side recovers we will grow in that segment as well,” said Dipak Gupta, joint MD, Kotak Mahindra Bank. “We are seeing a K-shaped recovery while some segments like home loans and agriculture have improved there is still some time for the broader economy to pick up pace.”
On the asset quality front the gross non-performing asset ratio was at 2.55% against 2.32% a year ago while the net NPA was at 0.64% versus 0.85%. The lender did not identify any NPAs since August 31, 2020, in line with the interim order of the Supreme Court.
Though the bank released proforma NPAs and said that if the order was not implemented the gross NPA would have been 2.70% and NNPA 0.74%. The bank, however, made provision for such advances.
“I don’t say it’s hunky dory and things are back to normal, but it’s improving,” Gupta said. “The proforma NPAs give a reasonable picture of the asset quality situation. Still early days for restructuring to pan out, we are seeing some flow on the retail and MSME side but not much from the corporates.”
The bank set aside Rs 368 crore for provisions and contingencies in the September quarter, compared to Rs 962 crore in June quarter and Rs 408 crore in the same period last year.
COVID related provisions as on September stood at Rs.1,279 crore which was 0.62% of net advances. The lender set aside just Rs 13 crore in the reporting quarter, compared to Rs 616 crore in the previous quarter.