Mumbai based private lender, Kotak Mahindra Bank has said there is no momentum in private capex yet, which explains low deposit growth.
“The private capex can be seen in two parts. We are already seeing brownfield capex. But what is happening is such kinds of capex are being financed currently by most of the corporates through internal approvals and their existing cash on their balance sheets,” said KVS Manian, whole-time director of Kotak Bank.
Brownfield capex generally means that companies expand their existing units for higher production, while greenfield capex is building new capacity from scratch.
“Unless greenfield capex happens, it doesn’t hit the banks for bank borrowings. So while we are seeing initial green shoots in terms of private capex, there is not enough momentum and secure kind of strong private capex yet. But we are hoping that as corporates exhaust cash on their balance sheets and exhaust their internal goals to fund the capex and the capex get larger, they will come to the banking system to borrow,” he added.
Kotak Bank on deposits
Kotak Mahindra Bank has attributed its drop in deposits to changing consumption patterns and customer behaviour.
“First you know, the household consumption and infinity to spend has gone up significantly. People like to travel, people like to go out and eat. And so there is a whole quest for experience, which also, to a certain extent, you know, makes a dent in the savings. Second, the savings are looking for better yields. So you’ve seen equity markets, you’ve seen the SIP reports. So it is really about how you are going to get a share of a customer’s financial wallet towards CASA and term deposits income,” said Shanti Ekambaram, Whole-Time-Director, Kotak Mahindra Bank.
The bank showed further de-growth in the current account and savings account (CASA) ratio at 47.7% in Q3FY24 from 48.3% in Q2FY24 and 53.3% in Q3FY23.
Q3 results
Kotak Mahindra Bank reported a net profit of Rs 3,005 crore for the quarter ended December 31, 2023, a growth of 7.6% on a year-on-year basis. The bank’s Net Interest Income (NII) rose 16% in the reporting quarter at Rs 6,554 from Rs 5,653 crore in Q3 of FY23. What is notable is the bank’s Net Interest Margin (NIM) is highest in the banking sector and it has maintained the same margin of 5.22% for the second time after the last quarter.
Ashok Vaswani: The new CEO
After the reshuffle at the top management when Uday Kotak resigned, Dipak Gupta took charge of the bank as MD & CEO, who retired on December 31. On January 1, Ashok Vaswani, a renowned banker who has worked globally, took charge as the Managing Director and CEO of the bank. When asked about his priorities as the new chief, Vaswani said, “It’s been just 17 days after taking charge and it’s too early to share anything.”
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