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Kotak Mahindra Bank managed to shore up its September quarter results by maintaining stable margins and keeping asset quality steady.
But stress in the commercial vehicle and construction equipment (CV/CE) and corporate segments resulted in its loan growth falling well below the industry level.
Increasing delinquency in the CV/CE segment has made the bank consciously wind down its exposure to this segment. From the beginning of last year, this segment has been seeing moderation in growth. However, from the June quarter of this year, the CV/CE loan book started declining on a year-on-year basis; its share in total advances is down to 13 per cent from 18 per cent last year.
The performance of the corporate segment too, has been tepid, growing at a mere 6 per cent.
It is the strong growth in the retail segment that has led to the 11 per cent growth in the loan book in the September quarter.
Within the retail segment, small personal loans and agriculture segment led the retail upsurge, growing 59 per cent and 23 per cent, respectively.
Home and SME (small and medium enterprise) loans also continued their strong run, growing 16-17 per cent.
While stress in the CV/CE and corporate segment led to a sharp spike in non-performing loans in the June quarter, the bank has weathered it better this quarter.
The gross NPAs in absolute terms have gone up by only 1 per cent from the previous quarter.
The bad loans within the CV/CE segment appear to have bottomed out.
The bank continues to build its low-cost current and savings account base by taking advantage of interest rate deregulation on savings deposits.
Kotak Bank as well as YES Bank, which were among the last to be awarded banking licences in 2003, have been building their low savings account base by offering higher rates on savings accounts.
While the core income grew at a healthy 22 per cent, other income lost steam on account of lower treasury income.
Kotak Bank made use of the window provided by the RBI to apportion its mark-to-market losses on their bond portfolio over the remaining three quarters, unlike its peers HDFC Bank, Axis Bank and YES Bank.
>radhika.merwin@thehindu.co.in
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