NIM to remain above 5% for FY24
Management expects net interest margin to stay above 5% for the current fiscal year, despite normalization from peak of 5.75%.
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Kotak Mahindra Bank · forward-looking guidance across the available source record.
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Loan growth of 1.5-2x nominal GDP
The bank aims to grow advances at 1.5 to 2 times nominal GDP growth for the full year, implying around 15-20% YoY.
ActivMoney as sustained strategic product
Management plans to continue aggressive focus on ActivMoney as a core deposit product, expecting it to drive customer acquisition and retention.
Unsecured retail book target of mid-teens remains
Management reiterated goal to reach mid-teens as a percentage of total advances once the RBI embargo is lifted.
Branch network to reach 3,000-3,500 in 4-5 years
Plans to add 150-250 branches per year, focusing on top 68-75 cities, to reach 3,000-3,500 branches over 4-5 years.
IT embargo costs within earlier estimate
CFO confirmed that incremental costs related to the RBI embargo are within the guidance provided last quarter.
NIM stabilization expected in H2 FY26
Management expects NIM to stabilize in the second half of the year as deposit repricing and CRR cuts offset asset yield drag, assuming no further repo rate cuts.
MFI credit costs to decline from Q2
Microfinance credit costs have peaked in Q1 and are expected to show a declining trend in coming quarters as fresh disbursements resume cautiously.
Credit card costs to decline in H2
Credit card credit costs have plateaued and should start declining in the second half of the year.
Retail unsecured target of 15% of advances
Aspirationally, the bank aims to grow retail unsecured advances to 15% of total advances, from current 9.7%, through MFI, personal loans, and credit cards.
NIM stabilization expected
Management expects NIM to stabilize as ~15bps of one-off drag (CRR, liquidity buffer) is unlikely to repeat next quarter.
Sonata Finance acquisition to close by Q4 FY24
RBI approval received; acquisition of microfinance NBFC Sonata Finance expected to be consummated by Q4 FY24.
Technology cost bubble to subside in 6 months
Management expects operating costs to trend downward after a temporary increase from technology investments, likely within six months.
Savings rate cut to improve NIM by ~4 bps
The 50 bps cut on savings deposits up to ₹5 lakh, effective Oct 17, is expected to add about 4 bps to NIM.
StanChart portfolio to add ~2 bps to yield
The acquisition of Standard Chartered's personal loan portfolio will add about 2 bps to average asset yield.
Credit costs to stabilize and decline in 2-3 quarters
Management expects credit costs to stabilize and then decline over the next 2-3 quarters as recoveries from secured and rural books offset slippages.
Target to be #3 private bank in 5 years
CEO Ashok Vaswani reiterated the aspiration to become the third-largest private sector bank in India over five years, through organic and inorganic growth.
NIM gradual improvement in H2
Management expects NIM to improve gradually in H2 FY26 as deposit repricing benefits flow through, assuming no further repo rate cuts.
Credit costs to gradually moderate in H2
Credit costs are expected to continue moderating in H2, with personal loan normalized, MFI improving, and credit cards stabilizing.
Unsecured book rebuild focus
Management aims to gradually rebuild the unsecured retail book (credit cards, personal loans) with disciplined underwriting, targeting growth in coming quarters.
Unsecured retail advances to reach early-to-mid teens
Management indicated comfort in growing unsecured retail advances to early-to-mid teens as a percentage of net advances, from current 11.6%.
Loan growth to track 1.75-2x nominal GDP
CFO stated that historically, loan growth has been 1.75-2 times nominal GDP, and current environment supports high-teens growth.
OpEx to assets ratio expected to decline from 3%+
Management noted current cost-to-assets above 3% is partly due to investment mode, with intention to bring it down over time.
Loan growth at 1.5-2x GDP
Management reiterated target to grow advances at 1.5 to 2 times nominal GDP growth, maintaining disciplined underwriting.
Standard Chartered portfolio migration in Q4
The acquired Standard Chartered portfolio is expected to be fully migrated onto Kotak's books during Q4 FY25.
Credit card and PL growth post-embargo
Once the RBI embargo is lifted, the bank plans to aggressively grow credit cards and personal loans, aiming to restore unsecured mix.
Cost optimization to improve ROA
Management expects cost control measures and fee income growth to support ROA above 2% as credit costs normalize.
Moderate NIM improvement in Q4
Management expects NIM to increase moderately in Q4 due to full-quarter benefit of CRR cuts and seasonal aberrations, assuming no further rate cuts.
Credit cost to gradually decline further
Credit cost expected to continue its downward trend in Q4 and Q1, though at a moderated pace, with retail CV stress plateauing.
Cost-to-asset ratio target of 2.5%-2.6%
Management aims to maintain cost-to-asset ratio in the range of 2.5%-2.6% over the medium term, driven by fixed cost control and digitization.
Unsecured retail loan growth to resume
Personal loan book expected to return to growth in coming quarters as organic disbursements pick up, while credit card spend growth to follow.
Unsecured loan mix target of mid-teens
Management reiterated aspiration to grow unsecured loans to mid-teens as a percentage of total advances, driven by personal loans, business loans, and microfinance.
Branch expansion of ~150 branches per year
The bank plans to continue adding around 150 branches annually, focusing on under-penetrated areas.
Tech spend at ~10% of opex
Technology expenditure will remain around 10% of total operating expenses, with a shift toward risk resilience and capacity.
Growth aspiration of 1.5-2x nominal GDP
The bank aims to grow customer assets at 1.5-2 times nominal GDP growth, implying continued above-system growth.
Asset growth at 1.5-2x nominal GDP
Management reiterated its philosophy to grow advances at 1.5 to 2 times nominal GDP growth, targeting sustainable franchise building.
Microfinance credit cost elevated for two more quarters
Management expects microfinance credit costs to remain elevated for the next two quarters before normalizing.
Unsecured credit card stress to decline in H2 FY26
Management expects credit card delinquencies to plateau and then decline in the second half of FY26.
NIM to decline gradually in FY27
Management expects NIM to reduce gradually in FY27, with the reduction more pronounced in the second half, but at a much slower pace than the 36 bps drop in FY26.
Credit cost to remain lower
Credit cost is expected to remain lower, driven by improved collection efficiency and tighter underwriting, especially in unsecured segments.
Cost-to-asset ratio to improve further
Management expects continued improvement in cost-to-asset ratio through fixed cost reduction and automation, building on the 27 bps improvement in FY26.