The bank has reported a PAT of Rs 16.8bn for Q4FY21. The NII and Fee Income progress were subdued. Moreover, there was a decline in 12bp q-o-q. The operating income progress of 25% y-o-y was supported by the high treasury profits and controlled opex. This allowed the bank to absorb higher provisioning prices and report the growth of PAT as 33%. In comparison to the deposit progress, the growth remained low.
The Kotak Mahindra Bank for FY21 has reported the gross slippages of 2.5% of the loans and the credit cost of 108bp. The net NPA remained stuck at 12% q-o-q. Under the RBI resolution, the restructured book was at 19bp of the loans, and SMA-2 outstanding was at 5bp. However, the total stressed loans were stopped at 3.5% of the loans. In contradiction to this, the bank is catching 3.1% of the total provisions, taking the net stressed loans to 0.4% of loans.
The total deposit growth has been now broken down to 7% y-o-y. The stoppage in the deposit happened due to the low purchase on the term deposits, as the CASA deposit grew at 15% y-o-y. On the opposite side, the growth of the loan was stopped. While mortgage loans and Agri Loans started increasing among the population, the corporate and the retail brings down the loan book progress.
As mentioned above, the periods of both the MD and joint MD will be ending in January-24. Hence, to appoint a successor, there will be a projection on KMB. Moreover, despite the muted opex growth, the opex to assets ratio has been higher than the peer average. The bank has higher employees to the branching ratio. Hence, regardless of the growth in the loan, this should keep the cost ratio stuck, and RoE muted. There are no changes in the FY22-23 PAT. Our unaffected TP of Rs 1,450 suggests 22x FY23e standalone EPS and 2.5x FY23e standalone BVPS.