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Nirmal Bang Report
Kotak Mahindra Bank Ltd.'s Q4 FY24 profit after tax of Rs 41.3 billion was at a variation of 17.6%/24.2% versus our estimate/consensus estimates. Profit after tax grew by 18.2% YoY/37.5% QoQ on the back of 17.6% YoY loan growth, improvement in net interest margin and asset quality and the impact of three one-off items:
Writeback of Rs 1.57 billion AIF provisions in Q4 FY24,
Interest on IT refunds at Rs 1.4 billion and
Tax credits of Rs 2 billion.
While deposits surprised positively, growing at 9.9% QoQ vis-a-vis top three peer banks, a good part of it came from TD growing by 14.5% QoQ and CA at 9.3% QoQ.
Savings Accounts remain a challenge, with the same growing at a modest 2.2% QoQ.
With respect to the RBI's supervisory action, the management sees Rs3-4.5 billion impact at the profit before tax level based on three factors:
Tech spends continuing at 10% of opex as it looks to ramp up its tech platforms as per the regulator's expectations and some expenses continuing on the existing Credit Card customer base,
Business lost in 811 and Credit Card verticals and
Savings in customer acquisition costs in these two segments.
In order to mitigate the impact of the RBI's action, the bank is increasing its focus on cross-selling and acquiring customers through physical network, for which it will also utilize 811 vertical's on-ground salesforce.
In our view, this step has the potential to bring in better ticket sizes of liability and asset products from the existing metro/urban customer base (as against better volume and low-value products coming through the digital route).
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