#Kotak Mahindra Bank net profit up 23%

Consolidated results at a glance

 Consolidated PAT for Q2FY15 increased to ` 718 cr from ` 583 cr in Q2FY14 up by 23%

Consolidated advances up 19% to ` 81,418 cr as on September 30, 2014 from ` 68,226 cr as on September 30, 2013. Without considering CV/CE, the growth in advances was 24% YoY.

Consolidated NIM for Q2FY15 stood at 5.0% (Q2FY14 – 4.9%)

Consolidated capital adequacy ratio (CAR) including unaudited profits as per Basel III as on September 30, 2014 is 17.9%. Tier 1 ratio is 17.1%.

Total assets managed / advised by the Group as on September 30, 2014 are ` 65,657 cr (September 30, 2013 ` 60,450 cr).

Kotak Mahindra Bank standalone results

Bank PAT for Q2FY15 increased to ` 445 cr from ` 353 cr in Q2FY14 up by 26%

Net Interest Income (NII) for Q2FY15 up 12% to ` 1,039 cr from ` 924 cr in Q2FY14.

Advances as on September 30, 2014 were up 20% YoY to ` 60,948 cr (` 50,609 cr as on September 30, 2013). Without considering CV/CE, the growth in advances was 28% YoY.

Restructured loans considered standard as on September 30, 2014 ` 161.5 cr – 0.26% of net advances

Savings deposits as on September 30, 2014 grew by 39% to ` 11,693 cr from ` 8,385 cr as on September 30, 2013.

Deposits as on September 30, 2014 were up 29% YOY to ` 68,103 cr (` 52,642 cr as on September 30, 2013)

Capital adequacy ratio of the Bank including unaudited profits as per Basel III as on September 30, 2014 is 17.6% and Tier I ratio is 16.6%

The provision coverage ratio on non-performing assets as on September 30, 2014 is 55.8%

Bank had 641 full-fledged branches (502 branches as on September 30, 2013) across 363 locations and 1,159 ATMs

#Kotak Securities launches Kotak Stock Trader on Windows platform for mobile phones

Kotak Securities announces the launch of its mobile stock trading application - Kotak Stock Trader (KST) on the Windows mobile platform. This is in an addition to the app already available on other operating systems like IOS, BB, Android and J2ME applications. KST enables Windows mobile phone users to place trades, check portfolio and account details, stream market updates on the go, amongst several other features. KST mobile app is free to download.

B Gopkumar, Executive Vice President & Head Broking, Kotak Securities said, “We are delighted to launch KST mobile trading app on the Windows platform. This is yet another endeavour to delight our customers with best in class products and services. KST for Windows is designed for a seamless anytime anywhere trading experience just as it is available on other mobile platforms.”

Non-customers too can get streaming data, access quotes, view charts and watchlists. Kotak Securities has over 1.5 lakh customers who use KST mobile trading app, of which 40% are guest users

Spending habits of India's Ultra High Net Individuals (UHNI); report by Kotak Wealth Management #TOPIndia

Top of the Pyramid is a research report on behaviour and spending patterns of the Ultra High Net Individuals (UHNI) in India; by Kotak Wealth Management.

Stays in old castles & villas in Ireland, Switzerland & Greece are getting popular among Indian ultra-HNIs #TOPIndia pic.twitter.com/jWUmludUFX
— Top Of the Pyramid (@TOPIndia) July 24, 2014

Highlights:-

• 16 per cent increase in the number of Indian Ultra High Net worth Households to around 117,000 in FY 2013-14.
• Indian ultra-HNIs have a combined wealth of 104 trillion rupees, estimated to jump to 408 trillion rupees in 2018-19.
• 100,900  Ultra HNH (High Net worth Households) in 2013  grew 16% to 117,000 in 2014.
• Over 60 per cent of the UHNIs surveyed consider philanthropy while planning annual expenditure; education (86 per cent) followed by ‘food for poor’ (79 per cent) get preference.
• 26 per cent of UHNIs surveyed also included Private Equity (PE) investments in their portfolios with Real Estate and IT emerging as top two sectors and e-commerce being the favourite on the PE investment block for UHNIs, according to the report.
• Anticipating a stronger domestic economy, India's ultra-HNIs are now optimistic about investing in equity markets.
• 58.6% of Indian HNIs consider luxury homes a status symbol.
• Almost half of India’s ultra HNIs reside in cities other than the top four metros.
• Stays in ancient castles and luxury villas in Ireland, Switzerland and Greece are gaining popularity among the ultra-rich in India.
• Indian ultra-HNIs want out-of-the-world experiences...literally! Many would love a trip to the Moon or into outer space.
• For 14.3% HNIs, islands are the perfect vacation location.
• 27.3% of Indian HNIs prefer to buy jewellery, diamonds, & precious stones abroad; rather than buy them in India.
• 5% Indian HNIs think a wood-paneled library is an essential amenity in their luxury home.

#Kotak Mahindra Bank's PAT for Q1FY15 ` 430 cr

Kotak Mahindra Bank standalone results:

Highlights:-

Bank PAT for Q1FY15 increased to ` 430 cr from ` 403 cr in Q1FY14 up by 7%

Net Interest Income (NII) for Q1FY15 up 9% to ` 1,002 cr from ` 917 cr in Q1FY14

Advances as on June 30, 2014 were up 13% YOY to ` 56,922 cr (` 50,539 cr as on June 30, 2013). Without considering CV/CE, the growth in advances was 20% YoY

Restructured loans considered standard as on June 30, 2014 ` 145 cr 0.26 % of net advances (` 6 cr as June 30, 2013, 0.01% of net advances)

Savings deposits as on June 30, 2014 grew by 37% to ` 11,013 cr from ` 8,057 cr as on June 30, 2013

Deposits as on June 30, 2014 were up 17% YOY to ` 61,407 cr (` 52,454 cr as on June 30, 2013)

Capital adequacy ratio of the Bank including unaudited profits as per Basel III as on June 30, 2014 is 19.1% and Tier I ratio is 18.1%

The provision coverage ratio on non-performing assets as on June 30, 2014 is 57.2%

Bank had 614 full-fledged branches (445 branches as on June 30, 2013) across 356 locations and 1,123 ATMs

Consolidated results at a glance


Consolidated PAT for Q1FY15 increased to ` 698 cr from ` 627 cr in Q1FY14 up by 11%

Consolidated advances up 13% to ` 77,076 cr as on June 30, 2014 from ` 68,418 cr as on June 30, 2013. Without considering CV/CE, the growth in advances was 18% YoY

Consolidated NIM for Q1FY15 stood at 5.0% (Q1FY14 – 4.8%)

Consolidated capital adequacy ratio (CAR) including unaudited profits as per Basel III as on June 30, 2014 is 18.8%. Tier 1 ratio is 17.9%

Total assets managed / advised by the Group as on June 30, 2014 are ` 66,575 cr (` 62,759 cr as on June 30, 2013)

Perspective on WPI numbers from Indranil Pan, Chief Economist, Kotak Mahindra Bank

A divergence seen between the CPI announced last week and the WPI announced this week. A downward shift in the Headline and Core CPI is not supported by a higher trend in the Headline and core WPI. Today’s WPI indicates that from the input side, there is not much comfort for the Indian business segment, with the metal and chemical prices moving on the higher side. With the INR on a weak trend again and with global oil prices going up, it is yet not clear what type of input side pressures the Indian business community would have to build into their business models. Given this scenario, there could be continued hesitancy to reduce prices, even as the demand side dynamics appear to have been contained in a large way. At this point, with the CPI and the WPI moving in divergent directions, the RBI would not factor either of the surprises into its reaction function. The monsoon (read as El-Nino), implications of this on cereals and oil-seed prices domestically as also in the Asian region could form a key determinant of inflation dynamics in the months ahead. Consequently, we hold on to our view that the RBI will, in all probability, stay on an extended pause, at-least till the end of the current CY

Perspective on IIP,CPI numbers from Indranil Pan, Kotak Mahindra Bank

Perspective on IIP,CPI numbers from Indranil Pan, Chief Economist, Kotak Mahindra Bank Limited
Growth trends look relatively better and confirm our belief that the economy has bottomed out. However, the sharp jump could have been due to very robust growth in the capital goods segment. The rest of the year should see growth picking up moderately as we expect the government to provide the right dose of policy to boost investments. The bigger focus for today will be on the CPI data where the core has softened in a significant way. Most of the items on the “miscellaneous side”, such as education, medical care have shown substantial reductions. Further, there has also been some softening of the housing inflation. All put together, these momentums represent a softening demand scenario, also reflected in the core CPI inflation at 7.7%, showing a softening over the last few months. The last time core inflation was at 7.7% was in June of 2013. Based on our calculations, we think that both Headline CPI and the core CPI inflation is likely to continue to slide down in the remaining part of the FY, with the RBI probably achieving its first target of sub-8% Headline CPI by January 2015. Thus, we see almost a 0% probability of any rate increases by the RBI through this FY and the next change in the key interest rate will be on the lower side. Our base case is for the RBI to stay on an extended pause, and see through any negative inflation implications that could emerge out of a poor monsoon.

Promoters sell about 3.24% equity stake in #Kotak Mahindra Bank

Kotak Mahindra Bank Ltd (KMBL) announced in Mumbai that Kotak Trustee Company Private Limited, a promoter group entity, has sold approximately 2.5 crore shares amounting to around 3.24% shareholding in KMBL.

The Bank had received a communication from the Reserve Bank of India (RBI) to bring down its promoter shareholding to 40% by September 30, 2014 per estimates provided by the Bank. The present sale reduces the shareholding of the promoters to 40.33%.

Commenting on the development, Paul Parambi, Head - Group Strategy, KMBL said, “The present sale by the promoters helps us substantially meet the RBI requirement for promoter dilution by September 30, 2014.”

The promoter holding will be reduced to 30% by December 31, 2016, KMBL said in a filing with the BSE earlier.In June 2012, the bank had provided a roadmap to RBI to reduce its stake from then 45.21% to 20% by March 31, 2018. Uday Kotak, the billionaire promoter & managing director of the private sector lender, owns 39.76% of the shares directly and the Kotak Trustee Company where Uday Kotak is the beneficial owner has 3.49% of the shares.

#Kotak Mahindra Bank's PAT up by 13% for FY14

 Kotak Mahindra Bank standalone results:-

Bank PAT for FY14 increased to ` 1,503 cr from ` 1,361 cr in FY13 up by 10%

Net Interest Income (NII) for FY14 up 16% to ` 3,720 cr from ` 3,206 cr in FY13

Net Interest Income (NII) for Q4 FY14 up 7% to ` 967 cr from ` 903 cr in Q4 FY13

Advances as on March 31, 2014 were up 9% YOY to ` 53,028 cr (`48,469 cr as on March 31, 2013). Without considering CV/CE, the growth in advances was 17% YoY

Restructured loans considered standard as on March 31, 2014 ` 10 cr 0.02 % of net advances (` 8 cr as March 31, 2013, 0.02% of net advances)

Savings deposits as on March 31, 2014 grew by 39% to ` 10,087 cr from ` 7,268 cr as on March 31, 2013

Deposits as on March 31, 2014 were up 16% YOY to ` 59,072 cr (`51,029 cr as on March 31, 2013)

Capital adequacy ratio of the Bank including audited profits as per Basel III as on March 31, 2014 is 18.83% and Tier I ratio is 17.77%

The provision coverage ratio on non-performing assets as on March 31, 2014 is 55.5%

Bank had 605 full-fledged branches (438 branches as on March 31, 2013) across 354 locations and 1,103 ATMs

Consolidated results at a glance:-


Consolidated PAT for FY14 increased to ` 2,465 cr from ` 2,188 cr in FY13 up by 13%

Consolidated advances up 8% to ` 71,693 cr as on March 31, 2014 from ` 66,258 cr as on                March 31, 2013. Without considering CV/CE, the growth in advances was 13% YoY

Consolidated NIM for FY14 stood at 4.97% (FY13 – 4.70%)

Consolidated capital adequacy ratio (CAR) including audited profits as per Basel III as on March 31, 2014 is 18.87%. Tier 1 ratio is 18.00%

Total assets managed / advised by the Group as on March 31, 2014 are ` 56,564 cr (March 31, 2013 ` 55,243 cr)

A few suggestions on capital issuance by Kotak Institutional Equities

 To meet the US$17 bn of capital requirement of Indian banks, we see a few options—(1) reduce payout ratios, as a dividend holiday since FY2010 could have improved tier-1 ratio by ~100 bps, (2) rights issue, given the current multiples, is another alternative as experimented by international banks in the depths of financial crisis and (3) other options like dividend reinvestment could be explored if the regulatory framework is enabled.

The problem with dividend payment and capital infusion in public banks

Public banks have repaid 60% of the capital infused (US$7.8 bn, which is ~40-45% of capital required to meet the core tier-1 regulatory capital requirements of the sector) between FY2010 and FY2014E (see Exhibit 1). In other words, our calculation suggests that the tier-1 ratio for the sector could have improved by ~100 bps (see Exhibit 2) in this period. Further, Government of India (GoI) shareholding has been consistently rising as it is being raised at a significant discount to book value and these banks have been raising capital primarily through preferential placement.

Curtailing dividend or issuing DRIP could be alternate solution
One of the solutions that we have seen in other countries is the usage of DRIP (Dividend Reinvestment Plan). International banks like HSBC, Standard Chartered Bank, Lloyds and UBS have given option to their shareholders to choose dividends between cash or stock. By enabling a share issuance in the form of dividends, the bank is able to conserve its net worth while giving liquidity to the shareholder. GoI could explore this option while keeping the net worth in these banks and look to sell its shares whenever it needs cash for its internal requirements. This could be an option that can be used in banks where the GoI and LIC holding is reasonably high. There would be a price overhang if the largest shareholder would remain a seller, but we feel this would be better than a combination of capital infusion and dividend payment to the same shareholder. We understand Indian companies would not be able to give this option as shares cannot be issued out of the current year’s earnings but they can issue redeemable preference shares or bonds. Zee Entertainment explored this option in FY2013 by giving a redeemable preference share at a yield of 6% and Dr. Reddy’s issued bonus debentures in FY2011, which are redeemable in 36 months.

Rights issue could be another solution, especially for banks with lower GoI holding
Another alternative worth exploring would be a rights issuance. Investor appetite is low when existing investors are being diluted when banks are raising capital through a preferential placement at a discount to reported book value. During the depths of the global financial crisis, international banks had raised capital through rights issue, issued at a discount of 35-50% (Exhibit 3) as it enables better participation. It would be easier to raise the desired capital as the largest shareholder (GoI) is committed in the issuance as evidenced in the past few years. Indian banks have raised capital through rights issue though the instances are far fewer (Exhibit 4).

Private banks have raised capital through ESOPs (Exhibit 6) and SBI has been mulling this as an option though we are not too sure if it would be successful in public banks.

What is a good price: FY2001-03 saw capital raised by Indian banks at 0.2-0.7X book

In FY2002-04, we saw several Indian banks (see Exhibit 5) raising capital at 0.2-0.7X book. The underlying situation was probably similar as the gross NPLs were at 9-10% and net NPLs were at 4-6%. A similar comparison today shows gross NPLs at 4%, net NPLs at 2% and restructured loans at 5% of loans. However, Indian banks were able to raise capital by issuing shares at a significant discount to book value.

Kotak Mahindra Bank’s ‘Junior’ ad – No. 1 among 11 global bank ads of 2013

Kotak Mahindra Bank’s Kotak Junior ad has been adjudged the Best Banking Ad Worldwide 2013, by Bank Innovation, a leading global blog on banking.

The TVC (http://goo.gl/dKgx5A), created by Cartwheel Creative Consultancy, features a young girl who is on a mission to collect coins. The ad shows the girl collecting coins from every possible place and concludes with her Kotak Junior card reaching her mail box. The ad conveys how today’s children are smarter in understanding money and encourages the habit of early savings amongst children.

The Bank Innovation blog identified 11 best bank ads that showcased the technology of mobile check deposit on the one hand and the age-old charm of kids saving coins on the other. It was an attempt to showcase ads from all across the world that are usually out of preview of American TV audiences.

Some of the chosen ads of the year 2013 are: Capital One Financial Corp. ad that features a famous American actor Samuel L. Jackson; Santander's extra20 checking ad that features Hollywood hotshot Robert De Niro; Bank of America Corp ad which shows how financial services touch lives of several generations. And the Wells Fargo commercial that shows a father’s day out with a baby. Only two Indian bank ads: Kotak Mahindra Junior Bank Account ad and ICICI Bank ad are among 11 best ads.

Kotak Mahindra Bank’s mobile banking app among world’s best in 2013 Mobile Excellence Awards

Kotak Mahindra Bank’s (KMB) mobile banking app has been recognised among top 5 apps worldwide in the User Experience category of 2013 Mobile Excellence Awards. Mobile Excellence Awards acknowledges and rewards outstanding contributions within the mobile ecosystem globally, and is a prestigious endorsement of accomplishments.

Ms. Shalini Mehta, Executive Vice President, Kotak Mahindra Bank said, “We are delighted at this recognition. The team has zealously worked not just to make banking available on a mobile device, but has delved a step beyond to identify different needs of individuals. The app sets new benchmarks in customer experience.”

KMB’s mobile banking app is available on Android, iOS, and Blackberry devices. It is built around the core premise of satiating customer’s banking requirements at his fingertip. The app is built to exacting standards to adhere to most secure internet banking architecture.

About Kotak Mahindra Bank

Established in 1985, the Kotak Mahindra group is one of India's leading financial services conglomerates. In February 2003, Kotak Mahindra Finance Ltd. (KMFL), the group's flagship company, received banking license from the Reserve Bank of India (RBI). With this, KMFL became the first non-banking finance company in India to become a bank - Kotak Mahindra Bank Ltd. http://www.kotak.com