Kotak Mahindra Bank reported a stellar rise in standalone net profit for the second quarter of FY18. Dipak Gupta, joint managing director, and Jaimin Bhatt, president and group CFO, said in a post results press conference that the bank aims to keep the net interest margins above the 4% mark. The management also pointed out that recapitalisation of public sector banks is unlikely to have any major impact on the market share of private players immediately. Edited excerpts:
What is your outlook on net interest margins (NIM)?
This quarter we have the NIMs at 4.33%. We took some hit this quarter on account of some portfolio on the agri side. Keeping the number north of the 4% mark right now is definitely there.
What do you think about the recapitalisation announcement?
Market growth will pick up. Ultimately, you will have public sector banks back in the market wanting to lend out more and lend out to a wider spectrum. From our point of view, to sustain the level of growth which we have is not very difficult.
Will this affect the market share of private banks?
Some of it will take time. Some of the recapitalisation will go towards providing for the stressed assets, which these banks really have. So, it will be some time before they complete that process. It is not that they will start lending from tomorrow morning.
As far as the ING Vysya merger is concerned, has the most of the synergies kicked in?
Synergy has more or less kicked in. Some amount of benefits of the synergies, particularly on the consumer side, we will see happening during the course of this year and next year also.
You are highly capitalised at 19.4%. Would this capital be used in the next couple of quarters?
It is difficult to say whether it would be a in couple of quarters. For example, it depends on how soon some of these stressed assets come out in the market place for sales. And growth will not happen in one or two quarters. I would say in the next one to two years, we should use up a reasonable amount of this capital.
What has happened with the bad bank?
I think recoveries are happening. It is still not fast enough. Recovery requires both willing seller and a willing buyer. Where growth is slow, you do not have too many willing buyers.
What is your exposure to the accounts in the second list released by the RBI?
We have exposure to six of the accounts. We have security enough and pretty much the provision which is required, we are very close there.
Are you reducing your exposure to renewable energy sector or are you placing it under watch?
We didn’t have too much of exposure per se. I don’t think we are reducing but one is watching carefully because at this point in time there are worries on regularity of repayments and prices have got impacted.