Latest news with #ExternalBenchmarkLendingRate
Time of India
7 days ago
- Business
- Time of India
What EBLR and MCLR mean and how your home loan and personal loan are affected by changes in these rates
Benchmark rate What is MCLR? Academy Empower your mind, elevate your skills What is EBLR? When you take a loan from a bank, it charges an interest rate. This rate is linked to a base or reference rate, which is called the benchmark rate. The banks add a premium or a markup on this benchmark rate to price various financial products like home loans and personal loans In 2016, the Reserve Bank of India (RBI) introduced an internal lending rate, called the marginal cost of funds-based lending rate (MCLR), to decide the minimum rates beyond which the banks would not lend to customers. The MCLR was decided by the bank on the basis of its internal cost of funds, operating costs, etc., and loans were extended to customers by adding a spread or mark-up to the was done to introduce greater transparency and make the rate changes by RBI more responsive for customers. It replaced the earlier Base Rate system, which had been introduced in 2010 to decide the minimum lending rates for banks. The Base itself had replaced the Benchmark Prime Lending Rate, which had been used before MCLR was replaced in 2019, it is still being used for mortgage products taken before this External Benchmark Lending Rate (EBLR) is the current benchmark that is being used by banks in the country to decide the lending rates for floating interest rate 2019, the RBI decided to move from its earlier internal benchmark rate to the external rate for floating rate retail loans like home loans, personal loans and those for micro, small and medium enterprises (MSMEs).The external benchmark most commonly used by banks is the repo rate, which is determined by the RBI. The banks add their spread and offer the lending rate to customers. For instance, if the repo rate being 6% and the bank's spread is 2%, then the floating rate for your home loan would be 8%.The decision to move from an internal to external rate was made to fasten the process of transferring any rate cut benefits to customers and make the system more transparent. This meant that if the repo rate dropped, the lending rate for home loans would also fall, reducing the EMIs for customers. With earlier rate systems, it would take the banks very long to offer the lower rates to borrowers.
Economic Times
28-07-2025
- Business
- Economic Times
Kotak Mahindra Bank shares plunge over 6% after muted Q1 show. Should you sell now?
Kotak Mahindra Bank shares fell 6.5% to the day's low of Rs 1,986.55 on BSE on Monday, July 28, following the announcement of its Q1 FY26 results. The private lender reported a 7% year-on-year decline in standalone net profit for the June quarter, at Rs 3,282 crore, down from Rs 3,520 crore a year ago. ADVERTISEMENT The dip in net profit comes despite a healthy rise in the bank's net interest income (NII), which grew 6% YoY to Rs 7,259 crore in Q1FY26 from Rs 6,842 crore in Q1FY25. The bank clarified that the reported profit was adjusted for a one-time gain from the sale of its general insurance business. If this gain is included, the unadjusted net profit for the year-ago quarter was significantly higher at Rs 6,250 crore. This quarter's earnings also exclude any gains from the divestment of Kotak General Insurance (KGI), which ceased to be a wholly owned subsidiary on June 18, 2024. Following the divestment, KGI has become an associate of the bank. Despite the decline in PAT, Kotak Mahindra Bank witnessed robust growth in its lending and deposit base during the advances for Q1FY26 grew 14% year-on-year, with net advances rising to Rs 4,44,823 crore as of June 30, 2025, compared to Rs 3,89,957 crore a year earlier. On the deposit front, the bank reported a 13% YoY increase in average total deposits, which grew to Rs 4,91,998 crore in Q1FY26 from Rs 4,35,603 crore in the same quarter last year. After the bank's Q1 results, domestic brokerage firm Antique has maintained a 'Buy' rating on Kotak Mahindra Bank but has revised its target price downward to Rs 2,440 from Rs 2,540. ADVERTISEMENT Also read: NSDL IPO: Issue opens on July 30, here's what you need to know about GMP, issue details Antique said that the earnings miss for the quarter was attributed to a higher-than-expected decline in margins and elevated credit costs. While loan growth was led by the corporate and secured retail segments, unsecured lending remained weak. Margins came under pressure due to rapid External Benchmark Lending Rate (EBLR) repricing and a shrinking unsecured mix. ADVERTISEMENT The bank also saw a deterioration in asset quality within the microfinance (MFI) and retail commercial vehicle (CV) segments. However, a rebound in unsecured credit is expected in FY26/27, which could support future to margin and credit cost concerns, Antique has lowered its FY26/27 earnings estimates by 6% and 3%, respectively. Nonetheless, the brokerage finds valuations to be reasonable at 2.2 times one-year forward price-to-book, with return on assets (RoA) at 2.2% and return on equity (RoE) projected at 14% for FY26–28. ADVERTISEMENT On Friday, the shares of Kotak Mahindra Bank closed (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel)
India Today
28-07-2025
- Business
- India Today
Explained: Why Kotak Mahindra Bank share price fell over 6% today
Kotak Mahindra Bank shares slid sharply by 6.5% on Monday, touching a day's low of Rs 1,977.20 on the Bombay Stock Exchange (BSE). Around 9:43 am, shares of the private lender were trading 6.48% lower at Rs 1,987.35. The decline came after the private lender posted a weaker-than-expected set of results for the April–June quarter. The stock decline comes in the wake of a 7% year-on-year drop in standalone net profit to Rs 3,282 crore, even though the bank reported steady growth in core lending net interest income (NII) for Q1FY26 rose 6% to Rs 7,259 crore, from Rs 6,842 crore in the same quarter last year, profitability took a hit due to the absence of a one-time windfall that had inflated last year's base. In the year-ago period, the bank had booked a significant gain from the sale of its general insurance business, pushing unadjusted profit to Rs 6,250 crore. That gain is missing this time, as Kotak General Insurance ceased to be a wholly owned subsidiary on June 18, 2024, and has since been reclassified as an the hit to net profit, operational metrics showed continued strength. Net advances grew 14% year-on-year to Rs 4.45 lakh crore, while average total deposits climbed 13% to nearly Rs 4.92 lakh crore. Loan growth was led by the corporate and secured retail segments, although unsecured lending remained OR SELL?Brokerage house Antique said the earnings miss was driven by a sharper-than-expected margin decline and higher credit costs. Margins came under pressure due to rapid repricing of External Benchmark Lending Rate (EBLR) loans and a lower share of unsecured credit. Asset quality, too, weakened slightly, with the bank's gross non-performing asset (GNPA) ratio rising to 1.48% from 1.39% a year earlier. Stress was visible in the microfinance and retail commercial vehicle loan bank also increased provisions to cover potential bad loans during the quarter, contributing further to the profit dip. That, along with the margin compression, has prompted several analysts to temper their near-term has cut its FY26 and FY27 earnings estimates by 6% and 3% respectively, but still finds the stock reasonably valued at 2.2x one-year forward price-to-book. Return ratios remain healthy, with RoA projected at 2.2% and RoE at 14% over FY26– least eight analysts have lowered their price targets following the Q1 results, bringing the median target to Rs 2,340, down slightly from Rs 2,350 last month, according to LSEG the market reaction reflects near-term disappointment, analysts remain broadly positive on the lender's longer-term outlook, especially if unsecured credit revives in the coming The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)- Ends
Time of India
28-07-2025
- Business
- Time of India
Kotak Mahindra Bank shares plunge over 5% after muted Q1 show. Should you sell now?
Kotak Mahindra Bank shares fell 5.5% to the day's low of Rs 2,007 on BSE on Monday, July 28, following the announcement of its Q1 FY26 results. The private lender reported a 7% year-on-year decline in standalone net profit for the June quarter, at Rs 3,282 crore, down from Rs 3,520 crore a year ago. The dip in net profit comes despite a healthy rise in the bank's net interest income (NII), which grew 6% YoY to Rs 7,259 crore in Q1FY26 from Rs 6,842 crore in Q1FY25. Explore courses from Top Institutes in Please select course: Select a Course Category Degree Finance Artificial Intelligence Technology Leadership others Data Science Operations Management Data Science Digital Marketing Healthcare Data Analytics MCA Design Thinking MBA PGDM CXO Public Policy Management Project Management Cybersecurity healthcare Others Product Management Skills you'll gain: Data-Driven Decision-Making Strategic Leadership and Transformation Global Business Acumen Comprehensive Business Expertise Duration: 2 Years University of Western Australia UWA Global MBA Starts on Jun 28, 2024 Get Details by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Play this game for 1 minute and see why everyone is addicted. Undo The bank clarified that the reported profit was adjusted for a one-time gain from the sale of its general insurance business. If this gain is included, the unadjusted net profit for the year-ago quarter was significantly higher at Rs 6,250 crore. This quarter's earnings also exclude any gains from the divestment of Kotak General Insurance (KGI), which ceased to be a wholly owned subsidiary on June 18, 2024. Following the divestment, KGI has become an associate of the bank. Despite the decline in PAT, Kotak Mahindra Bank witnessed robust growth in its lending and deposit base during the quarter. Average advances for Q1FY26 grew 14% year-on-year, with net advances rising to Rs 4,44,823 crore as of June 30, 2025, compared to Rs 3,89,957 crore a year earlier. On the deposit front, the bank reported a 13% YoY increase in average total deposits, which grew to Rs 4,91,998 crore in Q1FY26 from Rs 4,35,603 crore in the same quarter last year. Live Events After the bank's Q1 results, domestic brokerage firm Antique has maintained a 'Buy' rating on Kotak Mahindra Bank but has revised its target price downward to Rs 2,440 from Rs 2,540. Also read: NSDL IPO: Issue opens on July 30, here's what you need to know about GMP, issue details Antique said that the earnings miss for the quarter was attributed to a higher-than-expected decline in margins and elevated credit costs. While loan growth was led by the corporate and secured retail segments, unsecured lending remained weak. Margins came under pressure due to rapid External Benchmark Lending Rate (EBLR) repricing and a shrinking unsecured mix. The bank also saw a deterioration in asset quality within the microfinance (MFI) and retail commercial vehicle (CV) segments. However, a rebound in unsecured credit is expected in FY26/27, which could support future performance. Due to margin and credit cost concerns, Antique has lowered its FY26/27 earnings estimates by 6% and 3%, respectively. Nonetheless, the brokerage finds valuations to be reasonable at 2.2 times one-year forward price-to-book, with return on assets (RoA) at 2.2% and return on equity (RoE) projected at 14% for FY26–28. On Friday, the shares of Kotak Mahindra Bank closed ( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
Time of India
16-07-2025
- Business
- Time of India
HDB Financial shares may rally up to 10%, say brokerages unfazed by weak Q1. Why are they bullish?
Shares of HDB Financial Services could climb as much as 10% from current levels, according to analysts at Emkay Global and InCred Equities, who maintained a bullish stance on the non-bank lender despite a seasonally weak first quarter marked by modest loan growth and rising credit costs. Emkay Global reiterated its 'buy' rating on the stock with a target price of Rs 900, citing expectations of improved margins from the September quarter onward. 'One weak quarter does not change our investment thesis,' the brokerage said, calling HDB a long-term 'play on enterprising Bharat.' The target implies over 10% upside from the current market price of Rs 815.90. InCred Equities, while not assigning a target price, said HDB is 'finding the balance between AUM growth, NIM and credit cost', noting positive signals from margin expansion and better asset mix. The brokerage highlighted that 95% of HDB's borrowings are linked to the External Benchmark Lending Rate (EBLR), allowing faster benefit transmission from interest rate cuts. Shares of HDB Financial Services were trading 3% lower on Wednesday at Rs 815.90 on the BSE. Margin resilience, product mix shift underpin outlook Live Events Despite a 2% sequential rise in AUM to Rs 1.1 trillion and a 14% drop in disbursements, brokerages noted that HDB's shift toward higher-yielding segments such as used vehicles and consumer finance helped shore up profitability metrics. The company reported a 10bps expansion in net interest margin (NIM) during the quarter, aided by a 30bps improvement in yield, driven by product mix recalibration. Emkay said that margins are likely to improve further from Q2FY26 due to the rising share of fixed-rate loans, over 75% of the book, and the positive impact of rate cuts on the cost of funds. InCred said that 'the management has indicated more room for margin expansion' and pointed to operational strength despite top-line pressure. Credit costs elevated, but expected to normalise Both brokerages flagged asset quality pressures and elevated provisions as near-term concerns. Gross Stage 3 loans rose to 2.56% of total advances in Q1FY26, while credit costs stood at 2.5%, largely due to stress in the CV and unsecured business loan segments. Provisions jumped to Rs 670 crore, compared to Rs 412 crore a year earlier. Still, analysts said the risks are manageable. Emkay noted that the company is actively recalibrating the CV/USL book to contain credit costs, and the management expressed confidence in normalisation from Q2FY26. InCred echoed this view, and said that 'credit cost is likely to stabilize through Q2 and improve thereafter.' The provision coverage ratio (PCR) on Stage 3 assets stood at 56.7%, while Stage 2 loans rose 41% quarter-on-quarter, with a lower PCR of 20.4%. However, InCred said management remained 'comfortable at a lower PCR for stage 2 loans.' Fundamentals strong despite softer profit HDB Financial reported net profit of Rs 568 crore, down 2% year-on-year, while net interest income rose 18% YoY to Rs 2,092 crore, and pre-provision operating profit grew 17% to Rs 1,402 crore. Total loans grew 14% YoY to Rs 1.09 lakh crore, and AUM rose 15% despite seasonal softness in disbursements. Operational metrics remain healthy, brokerages said, and the company's rural footprint, strong underwriting framework, and in-house collection strength, including 12,500 employees across tele-calling and field teams, provide a cushion against near-term volatility. The improving macro environment and rural recovery are expected to support growth and profitability, Emkay concluded, reaffirming its confidence in HDB's medium-term prospects. Also read | HDB Financial Q1 Results: PAT falls 2% to Rs 568 crore; NII rises 18% on healthy loan growth ( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
