Kotak Mahindra Bank Q4F21 Conference Call Transcript | Yadnya Investment Academy

Balance Sheet and P&L Highlights:

• Total Unsecured Lending which includes consumer loans, credit cards, microfinance loans, and consumer durable loans have come down to 5.8% of the total balance sheet in March 2021 from 7.5% in March 2020.
• Post-Tax Operating profit of the bank for FY21 stood at Rs. 12,200 Cr., up by 22% YoY.
• While Post-Tax Profit of the bank for FY21 is Rs. 6,965 Cr. which is up by 17% YoY.
• Having a Strong CASA number of 60.4%.
• The capital Adequacy Ratio of the bank for this period remained strong at 22.6%.
• For Q4FY21, Post-Tax Profit was Rs. 1682 Cr. up by 33% YoY from Rs. 1,267 Cr. in Q4FY20.
• Net Interest Income (NII) for Q4FY21 was at Rs. 3,843 Cr. in Q4FY21, which was up by 8% YoY.
• Net Interest Margin for the bank ended up at 4.39% in Q4FY21.
• Other Income of the bank grew by 31% YoY for this quarter at Rs. 1,950 crores.
• Overall expenses for Q4FY21 at Rs. 2,385 crores, which is roughly about 2.5% higher than Q4FY20.
• Advances for the year have grown by 1.8%, but during this quarter Bank have seen advances grow by 4.5%, not annualized.

Digital Strategy:

• Till the previous year, the main engine for digital customer acquisition was 811 and savings proposition, including through video KYC.
• In FY21, have invested and focused on powering other engines of customer acquisitions in payments, lending, and investments, thus enabling multiple customer engines.
• Also, upgrading all our core systems this year, including assets, core banking, trade, cash, amongst others. Using APIs to integrate with external partners to enrich customer proposition.
• Digital payments to UPI continue to see a surge in both customer's and merchant's transactions. 94% of savings account transactions were through digital or non-branch mode this year.

Liabilities & Assets:

• Average savings deposit growth YTD Y-o-Y is 27%, and current accounts 17%.
• The focus has been on granular customer growth.
• CASA ratio was at 60.4% as of March 2021 versus 56.2% last year.
• On the Asset side, Bank continued to focus on home loans. Offering home loans at the interest rate of 6.65%, the lowest interest among the players.
• In the case of Personal Loans, Bank is back at Pre-Covid Levels of around 80%-85%.
• Will Build a strong base on Consumer Finance section in coming quarters.

Corporate Business:

• Focus also on building a wholesome corporate franchise continued.
• Have focused on this year and will continue to focus through the next 12 to 18 months on is up-gradation of technology in business.
• The bank is raising exposure on the NBFC sector but towards high-quality HFCs.
• Branch expansion will be current account market and SME markets as a focus and high transaction markets.

Consolidated Business Figures & Composition:

• Profit After Tax for the FY21 is Rs. 9,990 Cr. with an increase of 16% YoY.
• The non-banking entities contributed 35% of the total profit.

Insurance Business- Highlights:

• Appointed Mahesh Balasubramanian as a new Managing Director for Kotak Life Insurance.
• Here, Indian embedded value, IEV grew by 17.7% to Rs. 9,869 crores.
• Profit in this business for FY21 was Rs. 692 Cr. up by 14% YoY.
• Net Worth of the business crossed mark of Rs. 4,000 Cr. and giving strong capital adequacy ratio of 2.9%.
• Digital App for Advisors named “Boost” has utilization of 50%-60% in the first year itself.

Kotak Securities- Highlights:

• The total income for FY 2021 now stands at Rs. 2020 crores versus Rs. 1,690 crores for FY 2020.
• PAT for the full year now is Rs. 793 crores versus Rs. 550 crores for the year ended March 2020.
• The new direct mutual fund platform was also launched, which enables clients to invest in mutual funds through the direct route, at a far lower expense ratio.

Asset Management Business:

• Total AUM grew by 26% year-on-year to Rs. 2,34,798 crores at the end of FY21 and market share increased to 7.3%
• For the full year of FY 2021, our total assets under management grew by 17% year-on-year.

Promoter- RBI Guidelines:

• Currently, having a period of 2 years and 8 months from this point of time.
• A decision will be taking in the long-term interests of all shareholders of the bank, and this is deep DNA and commitment from the institution and it is a similar view.
• The current tenure of the promoter-CEO is up to the current approval from RBI, December 31, 2023.

Mortgage Business:

• Bank believes that residential mortgage is a centerpiece for a customer relationship.
• The company is going to go relentlessly at building the mortgage business even as building other businesses around it.
• The approach for this business will be for the medium term to long term.
• Pursuit of mortgages is a core part of the Bank strategy going forward.