Kotak Mahindra Bank reported a 7% y-o-y rise in net profit for the quarter ended June 30. Dipak Gupta, joint managing director, spoke to the media on the bank?s performance and expansion plans. Excerpts:
What is the outlook for credit growth and when will the bank start growing its commercial vehicle (CV) and construction equipment (CE) portfolios?
When we met last time, we were looking at a 15-20% growth range, but things are better now and we are looking at a 20% range.
The CV portfolio is still negative and there is a level of stabilisation, but it is still not comfortable enough to start pressing the accelerator. But the level of degrowth is coming down and, for this quarter, it has substantially reduced. I think what?s missing in the CV business is demand. Goods have to move and freight rates have to go up significantly, and not just by 1-2%.
The corporate loan book grew 27% y-o-y? Where has the growth been coming from?
Much of the increase is still in working capital loans, though, to some extent, it was from projects that were at various stages of closure in the past. But it?s still not a surge of capex, which has resulted in some of this demand.
What are your thoughts on the Reserve Bank of India allowing banks to raise infra bonds and flexible structuring of loans?
I think it?s pretty useful. In the context of the infra sector, it makes a lot of sense. Hopefully, it will result in lowering of costs and be a growth impetus for that segment.
I think what we need to look out for, ultimately, is: ?Where will the seven-year money come from?? Most of the savers are at the short end of the tenure. Very few people will be comfortable putting money for longer terms.
Kotak Mahindra Bank had said that it was keen on inorganic growth. Considering the push for low-cost housing, is the bank looking at buying assets?
I think we have to look at it because there is a distinct cost advantage there. And, it?s not that ?low? ? at R50 lakh in a place like Mumbai, it?s not that bad.
