Economic revival may further boost Kotak Bank's show
With a brake on capital expenditure and new investments, lenders appear to be banking on the retail segment to drive loan growth.
Kotak Mahindra Bank reported a spectacular performance in the quarter to March with a net profit growth of 47%, the highest in the past five quarters. Earlier in the month its peers such as Yes Bank and IndusInd Bank, too, reported strong numbers.
The strong profit growth was driven by a better-than-industry loan growth. With a brake on capital expenditure and new investments, lenders appear to be banking on the retail segment to drive loan growth.
It was no different for Kotak Mahindra Bank with its loan book equally split between the corporate and retail segments compared to a 45:55 proportion last quarter. Mortgages, auto loans and personal loans led the growth in the retail segment.
Additionally, the bank has taken a conscious decision to go slow on the troubled commercial vehicle segment. Deposit mobilisation, which is a concern for banks, does not seem to be a worry as it clocked a very high growth of 32%. The bank’s strategy to raise rates on savings accounts in November 2011 appears to have paid off with the savings deposits increasing by over 100% over the last one-and-a half years.