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Yes Securities Report
Though a body blow, RBI order won't damage profitability in a dramatic manner:
Mainly, the 811 and credit cards businesses are impacted since, for other businesses, the onboarding is not digital. It may be noted that in the first year of both these businesses, acquisitions are a drag due to upfront opex. The all-inclusive back-of-the-envelope impact is Rs 3-4.5 billion on profit before tax.
This is the annual impact and the intention is to get back to business-as-usual earlier than 12 months. This impact includes additional IT spend the bank feels it will have to carry out to come up to speed with requirements.
Kotak Mahindra Bank Ltd. may slow down somewhat in the near term but, as such, there is no structural reset on the growth front
Management stated that it is not sensible to be aggressive on credit growth at this juncture of the cycle. The bank does want to gain market share but in a smart manner and there will no wholesale change to risk appetite.
Once the bank reverts to business-as-usual with regard to the RBI order, it will become more aggressive regarding growth. Kotak Mahindra Bank continues to aspire to grow 1.5-2 times nominal GDP growth.
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