With Uday Kotak, vice-chairman and chief executive of Kotak Mahindra Bank, introducing his son Jay Kotak during an investor meeting in Mumbai on Thursday, the markets will now closely monitor the course of succession planning at the private sector lender. The senior Kotak’s tenure at the helm comes to an end in December 2023. Jay Kotak is currently co-head of the of the bank’s digital-only platform, 811, which accounts for close to 30% of the bank’s savings account sourced during Q4FY22.
“We will be closely watching the succession planning, with possibly two EDs in the fray (KVS Manian and Shanti Ekambaram) for the MD position, and the impact, if any, of potential holdco norms by the RBI,” analysts at Emkay said in a report.
Earlier this month, Uday Kotak had said he would be with the bank at least till his term ends. “Right now, my tenure is till December 2023 and you are going to see me at least till then,” Kotak had said, adding, “Our board members are fully aware of their responsibilities and they will act in a manner which is appropriate and responsible.”
According to analysts who attended the investor call, KMB added nearly four million customers through 811 in FY22, taking the total count to 12.3 million. The number of monthly active users stood at 6.2 million, or half of the overall 811 customer base. The average balance in 811 savings bank accounts was relatively low at Rs 6,100 per account, as compared to Rs 38,000 at the overall bank level. This seems to be low when compared to peer banks, Emkay analysts observed. The 811 product’s contribution to incremental recurring deposits (RDs) was 34% in Q4, and to new personal loans and non-life insurance premiums, it was 32%.
The bank’s management told analysts that the overall throughput is a better metric to track instead of savings balances, since most of these customers are young and are predominantly high spenders.
Analysts took divergent views of 811’s performance. While Motilal Oswal Financial Services commended the execution of KMB’s digital strategy, analysts at Emkay attributed the success of 811 to the higher savings rate offered by the bank. Since the launch of the platform, the bank’s current account savings account (CASA) ratio has improved to 61% from 44% in FY17.