Latest news with #AshokVaswani
Time of India
05-05-2025
- Business
- Time of India
What caused 14% degrowth in Kotak Mahindra's quarterly profit? Ashok Vaswani explains
Ashok Vaswani , MD & CEO, Kotak Mahindra Bank , acknowledges challenges in the microfinance sector during recent quarters. Kotak Mahindra Bank has launched new mobile banking apps after an embargo. The bank prioritizes sustainable growth, aiming for 1.5 to 2 times nominal GDP growth. Kotak Mahindra Bank emphasizes prudence and avoiding excessive risk. Explain the 14% degrowth in the quarterly profit? What is the reason for that? Ashok Vaswani: The fundamental issue has been around the microfinance business. That is a business which has over the years delivered very good results for us. In Q3 and Q4, it has obviously been very difficult. This is an industry-wide issue and the losses have obviously kind of overwhelmed really well. And the good news is during the quarter, we got a technology embargo and then we have got exciting plans as we go ahead. You talked about the embargo. Now that problem is away, what is your plan for FY26? How will it help and what is your target now? Ashok Vaswani: The whole idea was to utilise the time when we were under embargo not only just to fix the basics around resilience, capacity planning, and all that kind of good stuff, but we rethought the entire go-to-market strategy from a digital perspective. Coming out of the embargo, we have launched the new mobile banking app for the Kotak customer as well as new apps for the 811 customers. Both these apps are being very well taken up by customers and they are unique to that particular customer segment. So, we can make it really targeted, which is what has been my mantra, customer segmentation, customer focus, and how you build propositions for that customer and that is what we are going to continue to do. So, whether it is 811, the mobile app, whether it is platforms for our corporate customers which we have invested in so that we can get much better payment solutions, whether it is in Kotak Securities with our new app and how customers can do much more or investments for our average banking customers on our Cherry app – we are going very strongly ahead with our technology efforts. Live Events You Might Also Like: Kotak Mahindra Bank Q4 results: PAT drops 14% YoY, NII up 4% You have maintained that you plan to grow 1.5 to 2 times of nominal GDP growth in loan growth . Going ahead in this financial year, will you continue with that plan which means the growth which is there this year can be slightly better or will there be some pressure? Ashok Vaswani: This is more of a risk appetite statement. If you are growing very aggressively beyond two, two-and-a-half times normal GDP growth, you are obviously taking additional risks. My goal is to build a sustainable franchise which our customers are very proud of. That requires me to do it with prudence and not take any shortcuts. So, what we are saying is from a prudent statement and not taking on too much risk, we believe one-and-a-half to two times nominal GDP growth is a good thing. Now, there may be certain circumstances, like we come across a particular acquisition or there are some areas which we have never done before which we want to go into which will grow, but the guiding principle is 1.5-2 times, exceptional circumstances may apply. And similarly for deposit growth how do you assess this fiscal year? Ashok Vaswani: Last fiscal year, at least the first three quarters were tough because market liquidity was tough and saw the entire banking system kind of struggle with deposit growth. Q4 became much easier. Into this fiscal year, we are seeing liquidity easing by the RBI which obviously bodes well. I think repo rates are going to have a pretty significant impact. On the capital market side, as we have seen last year, in the first half, capital markets were doing exceptionally well, so everybody was channeling their savings into the capital markets. How capital markets behave out into this fiscal year is to be seen. You Might Also Like: Personal loans & credit card stress has moderated, but microfinance pain persists', Kotak CEO Vaswani says IndusInd Bank raises FD interest rates on select tenures and Kotak Mahindra Bank reduces FD rate on select tenures
Time of India
04-05-2025
- Business
- Time of India
Personal loans & credit card stress has moderated, but microfinance pain persists', Kotak CEO Vaswani says
Private lender Kotak Mahindra Bank is re-evaluating its long-term approach to the microfinance sector , citing limitations in the traditional joint liability group (JLG) model. In an interview, managing director and chief executive Ashok Vaswani tells Saloni Shukla that fiscal 2026 may bring new challenges due to global trade tensions and geopolitical risks . Edited excerpts: #Pahalgam Terrorist Attack India much better equipped to target cross-border terror since Balakot India conducts maiden flight-trials of stratospheric airship platform Pakistan shuts ports for Indian ships after New Delhi bans imports from Islamabad You've completed one full fiscal year at Kotak. How do you see it? There were speed bumps and headwinds that hit us last year, whether it was microfinance, unsecured loans or the technology ban. We are systematically working our way through each of these. Some issues are now completely behind us, and some need a bit more work. But every day isn't going to be rosy. Overall, I remain very bullish. I still believe that the journey we've embarked upon is the right one. Play Video Play Skip Backward Skip Forward Mute Current Time 0:00 / Duration 0:00 Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 1x Playback Rate Chapters Chapters Descriptions descriptions off , selected Captions captions and subtitles off , selected Audio Track Picture-in-Picture Fullscreen This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Text Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Transparent Caption Area Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Drop shadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like New Container Houses Vietnam (Take A Look At The Prices) Container House Search Now Undo What are your expectations for FY26? I think many of the headwinds we faced in FY25 are now behind us, allowing us to grow more aggressively. That said, new challenges may emerge. For instance, we'll need to adjust our business model in response to changes in repo rates. Tariff tensions under (US President Donald) Trump and broader geopolitical uncertainties are also unknowns. But our North Star is now defined and once the engine is moving in the right direction, acceleration becomes much easier. I'm hopeful we can ramp up quickly and avoid too many distractions. What's your strategy for microfinance? Live Events In the last two quarters, microfinance caused a lot of pain. Will it continue for one more quarter? Absolutely. Possibly two. That said, the business still made money, we didn't lose any. The real question is about scale. A business that is this cyclical shouldn't grow to a size where it keeps you up at night. We know this sector tends to blow up every 3-5 years. We need to find a way to temper that volatility. How do you plan to do that? We need to ask ourselves, is what we're seeing now cyclical, or structural? The JLG model can no longer be relied on for protection. If we're going to evaluate each customer individually, we have to consider how many of them have credit histories or are captured by credit bureaus. Then comes the question, what's the cost of such credit assessments, and how does that impact the business model? This is a business model that has to be rethought. Is the stress on unsecured lending easing overall? Stress in personal loans has come down. Credit card concerns have plateaued. In microfinance, however, we're still seeing stress. We've already reduced our exposure significantly. In Q1, there could still be some elevated stress, but we expect some relief after that. With the credit card embargo now lifted, how do you plan to grow that business? We love the credit card business and customers love their cards too. The real question now is how to offer a range of cards that appeal to various customer segments. So yes, we're reworking our credit card strategy and plan to pursue a much more aggressive approach in the coming months. FY25 saw notable leadership attrition at Kotak. How are you addressing this? Some of these people had been with us for a long time. They got new opportunities and that's okay. We have enough bench strength to manage the transition. A certain level of fresh thinking is a good thing. You explored IDBI Bank . IndusInd Bank is also facing issues. Is M&A a real possibility for Kotak? M&A is definitely an important route for us. But any such transaction must fit both strategically and financially. Just because we have the capital doesn't mean we'll do a deal for the sake of it. We evaluate every opportunity that comes our way, and if it mee-ts both those criteria, we'll go ahead.
Mint
04-05-2025
- Business
- Mint
Microfinance stress, RBI embargo weighed on Kotak Bank's Q4 profitability
Mumbai: Kotak Mahindra Bank's profitability in the fourth quarter was dragged by stress in its microfinance portfolio and consequently slower growth in its agriculture and rural portfolio, even as the lender's operational metrics remained largely stable. The private sector lender's net profit in the December quarter fell 14% on-year to ₹ 3,552 crore. Sequentially, though, profit after tax was 7.5% higher. 'The microfinance business has gone through a very tough time, and that is what has contributed to the higher losses,' Kotak Mahindra Bank's managing director and chief executive officer Ashok Vaswani said in the post-earnings conference. Growth in the retail portfolio was also slow as the lender was unable to expand its high-yielding credit card book because of the Reserve Bank of India's embargo on the bank onboarding new customers. The embargo was lifted after 10 months in February. Vaswani said the bank's personal loan book saw good growth led by its acquisition of Standard Chartered India's personal loan portfolio in January. The corporate loan book also grew 'really well', he said. Customer assets, including advances and credit substitutes, rose 13% on-year to ₹ 4.8 trillion at the end of March. Loans, including inter-bank participation certificates (IBPC) and Bill Rediscounting Scheme (BRDS), were at ₹ 4.4 trillion, also up 13% on-year. Consumer loans were up 17% largely led by strong growth in mortgage, business banking and personal loans, whereas growth in the credit card business was 7% lower on-year. Commercial loans were up 6% on-year, with commercial vehicle, commercial equipment, and tractor finance seeing good growth. However, Kotak Mahindra Bank's agriculture portfolio grew a muted 1% on-year and its retail microcredit loan portfolio fell 33%. Corporate loans grew 6% and SME loans by 31%. 'Advances sort of reduced, but what we did was, we turned to build the credit substitutes such as commercial papers (CPs) and bonds etcetera,' deputy MD Shanti Ekambaram said, adding that the bank let go of some wholesale segments given the high pricing competitiveness in the segment. Vaswani said Kotak Mahindra Bank aims to grow its share of unsecured and personal loans to around 15% of its advances, compared with 10.5% now and around 12.7% before the credit card embargo and hit on microfinance. Unsecured retail advances, including retail microcredit, comprised 10.5% of net advances in the fourth quarter, mostly unchanged from a quarter ago and lower than 11.8% in the corresponding quarter of the previous year. Overall loan growth in 2025-26 is expected to be 1-1.5 times of GDP growth, Vaswani said, adding that Kotak Mahindra Bank aimed to maintain its credit-deposit (CD) ratio at 85-87%. The CD ratio was 85.5% on 31 March. Net interest income (NII) was up a muted 5% on-year at ₹ 7,284 crore. Net interest margin for the quarter was 4.97%. Chief financial officer Devang Gheewalla said NIM in the fourth quarter was supported by cuts on saving account rates and a financial year-end rise in average current account balances. Going forward, while higher lending in the unsecured credit card space would aid margins, overall, the margins would remain under pressure as the repricing on the liability side plays out, he said. The bank's gross non-performing assets ratio was 1.42% as of 31 March, worse than 1.39% a year ago but better than 1.50% in the previous quarter. Net NPA ratio at 0.31% had improved from 0.41% a quarter ago and 0.34% a year ago. Slippages during the fourth quarter were elevated at ₹ 1,488 crore, of which ₹ 135 crore were upgraded during the quarter itself. The bank wrote-off loans worth ₹ 873 crore during the quarter and saw recoveries and upgrades of ₹ 747 crore. Provisions were also high at ₹ 909 crore, significantly up from ₹ 794 crore a quarter ago and ₹ 264 crore a year ago. First Published: 4 May 2025, 11:12 AM IST
