Tag: Kotak Mahindra Bank

Buying Citi assets can be a game-changer for Kotak, IndusInd faces constraints, BFSI News, ET BFSI

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The retail and credit card business put on the block by Citibank India are best fit for Kotak Mahindra Bank and DBS Bank, while for HDFC Bank it is still a good asset though not a game-changer, according to CLSA.

The brokerage house had estimated the value of Citi‘s business in India at $2-2.5 billion.

HDFC Bank, Kotak Mahindra Bank, Axis Bank, IndusInd Bank and DBS Bank have emerged as the top five contenders to take over Citi India’s retail business that includes, credit cards, mortgages, wealth management and deposits. The race will be narrowed down to three, with whom Citi would negotiate a higher value.

How they stack up

While IndusInd Bank has the size and valuation constraints to acquire such an asset, the operations can be a game changer for Kotak Mahindra Bank because it can add 20% to the bank’s current retail loans, it said. “For Kotak Bank, the business adds 20% to its current retail book and increases its card segment by 3x (times),” the brokerage said in a note. “It is also complementary to its affluent customer base and Kotak Bank’s premium valuation will aid it in a purchase.”

It said Citibank’s affluent retail business also fits well with DBS Bank India’s premium offerings and banking relationships. DBS Bank does not have a credit card business in India.

For HDFC Bank, the acquisition won’t be a game changer as it is only nearly 6% of the lender’s total book, it said, while for Axis it will be a valuable acquisition, but valuations would be constrained, it said.

What’s on offer?
Citi’s total assets In India at the end of FY20, including credit extended to Indian institutional clients from offshore Citi entities, stood at Rs 2.99 crore.

The consumer banking business, which includes cards and loans against property, would be around Rs 32,000 crore. It also has a huge amount of savings accounts built over the last few years, which has a lucrative liability book and also credit cards, in which it was the largest among foreign banks in India.

The bank also had Rs 27,911 crore of loans to agriculture, affordable housing renewable energy and micro, small and medium enterprises (MSMEs). Of this, Rs 4,975 crore was to weaker sections, as part of Citi India’s priority sector lending obligations, results released last year showed.

Citi Bank has 2.8 million retail customers, 1.2 million bank accounts and nearly 2.6 million credit cards as of June.

Citi’s consumer business contributes about a third to the overall India business in terms of profitability, while total India business contributes 1.5% of profits to the global book. Overall, Citibank’s India unit had a market share of advances and deposits of 0.6% and 1.1%, respectively.

Citi credit cards
Buying Citi assets can be a game-changer for Kotak, IndusInd faces constraints

Citi started retail operations in India in 1985 and was among the pioneers of credit cards in the country. However, its share of credit cards has dropped from 13% to 6% now. Despite being the sixth-largest player in the space, Citi has the highest average spend on its card touching close to 2 lakh per card. The average spends per card for Citi is 1.4 times higher than the industry average, making it a profitable business for the bank in India. The other four major players have had nearly the same steady growth in spend per card at 11-12%.

Citibank’s outstanding credit cards as of February stood at 2.65 million, the largest among foreign banks in India, ahead of 1.46 million by Standard Chartered and 1.56 million by Amex. Citi India had 2.9 million retail customers with 1.2 million bank accounts as of March 2020.

At the end of March 2020, Citibank served 2.9 million retail customers with 1.2 million bank accounts and 2.2 million credit card accounts.



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CLSA, BFSI News, ET BFSI

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Mumbai: The sale of Citibank’s India retail business is a good opportunity for existing banks to strengthen their affluent customer bases, said CLSA.

IndusInd Bank has the size and valuation constraints to acquire such an asset, while for HDFC Bank it is not a game-changer in terms of size but it is still a good asset, the brokerage said.

Citibank’s India retail business is up for sale as part of a global restructuring. On the block is the $3.5 billion retail asset book with a 4-6% market share of card or spending, sizeable home loan book and an affluent deposit base.

Reports suggest five banks including HDFC Bank, Kotak Mahindra Bank, Axis Bank, IndusInd Bank and DBS Bank have been shortlisted.

The brokerage said the size of Citi’s business is too large for IndusInd Bank and its valuation does not favour deal-making.

Valuations would be a constraint for Axis Bank as well although it would be a favourable acquisition.

Citi’s affluent retail business fits well with DBS Bank India’s premium offerings and banking relationships, said CLSA.

For HDFC Bank, the retail book size of Citibank is not a game-changer but for Kotak Mahindra Bank, the business adds 20% to its current retail book and increases its card segment by three times, said CLSA. It is also complementary to its affluent customer base and Kotak’s premium valuation will aid it in a purchase, said CLSA.



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Kotak Mahindra Bank to offer home loans at 6.5% through festive season

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While the special rate will be available across all loan amounts, a borrower will need to have a minimum credit score of 800 to be offered a loan at 6.5%.

Kotak Mahindra Bank on Thursday announced that it has reduced its lowest home loan interest rate by 15 basis points (bps) to 6.5% per annum. The special rate will be available under a limited-period festive offer beginning September 10 and ending on November 8.

While the special rate will be available across all loan amounts, a borrower will need to have a minimum credit score of 800 to be offered a loan at 6.5%. State Bank of India’s (SBI) home loans start at 6.7%, while both Housing Development Finance Corporation (HDFC) and ICICI Bank price their cheapest home loans at 6.75%.

Ambuj Chandna, president – consumer assets, Kotak Mahindra Bank, said that at 6.5%, the lender’s pricing will be significantly more attractive than that of some of its competitors. “This is a long-term play for us and while the 6.5% rate is specifically applicable to the festive period, let me assure all consumers that we will continue to be extremely competitive on pricing, when it comes to home loans even after this period,” he said.

Kotak Mahindra Bank has been growing in the home loans segment quite aggressively and it has been a high-growth segment for the lender over the last one year, Chandna added. “We believe there is an opportunity to grow. The strategy is aided by the fact that there is liquidity, interest rates are down and gives us a cushion,” he said.

The lender has 25-26% of its lending book in mortgages. The home loan book has been one of the best-performing books for the bank and apart from some minor shifts resulting from the pandemic, on a relative basis the book has done well, according to Chandna. Kotak Mahindra Bank’s rates have helped it to attract better-quality customers as home loan borrowers are very price-sensitive, he said.

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Festival season offer: Kotak Mahindra Bank reduces home loan rates by 15 bps to 6.5%

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With the festival season starting, Kotak Mahindra Bank on Thursday announced a 15 basis point reduction in home loan rates from 6.65 per cent to 6.5 per cent.

“This special rate of 6.50 per cent per annum is a limited period festive season offer beginning September 10 and ending November 8, 2021. With this, Kotak Mahindra Bank continues to offer one of the most competitive rates in the home loan industry,” it said in a statement.

The rate is applicable for fresh home loans and balance transfers and is not linked to the home loan amount.

“Home loans is a growth driver for retail assets for Kotak Mahindra Bank. We are looking to increase our market share in the business. The focus is on fresh sales and balance transfers,” said Ambuj Chandna, President – Consumer Assets, Kotak Mahindra Bank.

The offer will continue from Ganesh Chaturthi to the festivals of Navratri and Diwali, adding that customers take important decisions like buying a home during the festival period.

The focus will be on both salaried and self-employed customers.

The private sector lender had reduced its home loan rate to 6.9 per cent in October 2020 and has since then been further lowering rates.

According to the bank statement, with Kotak Digi Home Loans, applicants can now apply for and receive an instant in-principle sanction letter along with their loan amount eligibility, the tenure of the loan, interest rate and EMI in an end-to-end fully digital, paperless and contactless process.

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Kotak Mahindra Bank cuts home loan interest rate to 6.5% for 60 days, BFSI News, ET BFSI

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Kotak Mahindra Bank has cut its interest rate on home loans to 6.50% from 6.65% per annum, starting from Friday till November 8.

The bank is offering these rates in view of the upcoming festive period. These rates will be prevalent for both fresh home loans and balance transfers, and will be available across all loans amounts and is linked to a borrower’s credit profile.

The bank’s home loan rates are linked to an external benchmark, that is the Reserve Bank of India’s policy repo rate of 4%

With Kotak Digi Home Loans, home loan applicants can apply and receive an instant in-principle sanction letter, loan amount eligibility, tenure of the loan, interest rate and EMI in an end-to-end contactless process.
Following are the features of the home loans:
> Starting at 6.50% per annum, on fresh home loans and balance transfer loans
> Attractive rates for both salaried and self-employed customer segments
> Instant in-principle sanction with Kotak Digi Home LoansConsumers can also apply through Kotak’s bank branches across India. The bank’s home loans are available across over 100 cities and towns in India. Existing Kotak customers can also apply through the Kotak mobile banking app or net banking.



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Know how Banks and Financials performed throughout this week, BFSI News, ET BFSI

Personal Finance

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Benchmark indices have been on a record-breaking rally lately and August witnessed the stock market reaching many new highs. The BSE benchmark soared over 9% last month. Buying action continues to follow a positive global trend. The index has formed a strong bullish candle on weekly charts.

Major market driving factors for this week are considered to be the Improving general pandemic conditions, GDP numbers indicating revival in economic activity, increased confidence in facing a potential third wave, the stress on universal vaccination and the indications from Jackson Hole address.

Monday Closing bell: All time high
Nifty made a strong bullish bar on Monday (30 August, 2021) closing at its all time high level. The rally was also supported by Banknifty. Nifty closed at 16,931 up by 225 points. Banknifty closed at 36,347 up by 720 points.

Tuesday Closing bell: All time high
Another All time high Nifty made another lifetime high on Tuesday. It had been showing strength since the last four trading sessions. The Sensex closed at 57,552.39, up 662.63 points, or 1.16%, while Nifty was at 17,132.20, up 201.15 points, or 1.19%. Metals, IT financials were top gainers.

Wednesday Closing bell : Markets end in Red
The Indian benchmark indices ended in the red after hitting record highs in the early trade on September 1. At close, the Sensex was down 0.37%, at 57,338.21, and the Nifty was down 0.33%, at 17,076.30.

However, Axis Bank and Induslnd Bank were among top BSE Sensex gainers. Bank Nifty gained 0.4% to settle at 36,574. Nifty sectoral indices mostly ended in green, except for Nifty Financial Services.

Thursday Closing bell: Markets end Flat
Benchmark indices ended higher with Nifty closing above 17200 led by IT and FMCG stocks. At close, the Sensex was up by 0.90% at 57852.54, and the Nifty was up 0.92% at 17234.20. Except for auto and PSU Bank, all other sectoral indices ended in the green with IT and Pharma indices up 1% each. HDFC Life was amonth the top Nifty gainers. BSE midcap and smallcap indices gained over 0.5% each.

Friday Closing Bell: Fresh record
The Sensex closed at 58,129.95, up by 0.48%, while the Nifty was at 17,323.60, up 0.52%. Boosted by Reliance Industries and a jump in Exide Industries following the sale of the battery maker’s insurance unit Exide Life Insurance to HDFC Life Insurance, while the focus was also on a key US jobs report later in the day.

Among sectoral indices on the NSE, Nifty Bank fell the most – down nearly by 1.5% to 23,531 levels. HDFC Bank, Induslnd Bank, HDFC Life were among the top losers.

Industry Key Takeaways

India’s GDP rose 20% in the June quarter

India’s economy expanded at its fastest ever in the June quarter, helped by the low base of the year-earlier record contraction and a strong rebound in manufacturing and construction, data released on Tuesday showed. The data also reflected thag Fiscal deficit narrowed to a nine-year low of 21.3% of annual budget estimate as of July end at Rs 3.21 lakh crore, helped by a rise in revenues and decline in non-interest revenue expenditure.

Kotak Mahindra Bank to sell 20 crore shares of Airtel Payments Bank to Bharti Enterprises:

Kotak Mahindra Bank on August 31 said it will sell 20 crore shares held in Airtel Payments Bank (APBL) for a cash consideration of Rs 294 crore or more to Bharti Enterprises Ltd. A share purchase agreement was executed by the bank for divestment of 20,00,00,000 equity shares (8.57 percent stake) held by Kotak Mahindra Bank Ltd in APBL.

ICICI Bank hits Rs 5 lakh crore market cap; what should investors do?

On September 1, Private sector lender ICICI Bank crossed Rs 5 lakh crore in market capitalisation for the first time only to become the second bank to attain the said feat. Among banks, HDFC Bank, the country’s largest lender by assets, remained at the top with Rs 8.7 lakh crore market capitalisation, while SBI is at the third spot with Rs 3.81 lakh crore market cap, Kotak Mahindra Bank at 4th and Axis Bank at 5th.

HDFC Life Insurance share price hits 52-week high

HDFC Life Insurance Company share price touched 52-week high of Rs 775.65and rising percent intraday on September 2 as company board is going to consider fundraising on September 3.

“A meeting of the board of directors of HDFC Life Insurance Company is proposed to be held on Friday, September 3, 2021 to consider issue of equity shares and / or other securities of the company by way of preferential allotment,” company said in its release.

HDFC Life to acquire 100% stake in Exide Life Insurance:

HDFC Life Insurance on Friday announced that its board has approved acquisition of 100% of the share capital of Exide Life Insurance Company Ltd for a total consideration of Rs 6,687 crore. Exide Life will be subsequently merged into HDFC Life.

HLIC also announced that out of the aggregate amount, Rs 725 crore will be settled in cash and the balance via issuance of over 8.70 crore equity shares at an issue price of Rs 685 per share to Exide Industries Ltd.



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Key factors driving the market, BFSI News, ET BFSI

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NEW DELHI: Traders were cautious ahead of key jobs data from the US, but benchmark indices gained for a second straight day on Friday. Financials and auto stocks were in demand, while select IT names saw selling.

The exuberant retail investors have been buying on every dip. This ‘buy on dips’ strategy has been rewarding retail investors and, therefore, they can be expected to continue with that strategy until there is a sharp correction and negative signals in the market, said an analyst.

“Sensex achieved another milestone of 58k and it is surprising the street by its ferocious move and creating new history almost every day. This bull run has more legs to go and it is just a matter of time when Sensex will cross the 60,000 mark,” said Santosh Meena, Head of Research, Swastika Investmart.

“Technically, 58700 is an immediate target level while 57500 is immediate support whereas 56300-56000 will be a strong demand zone at any correction.”

How are the bluechips doing?
After opening in the green, benchmark indices maintained their lead. At 1.38 pm, BSE flagship Sensex was up 274 points or 0.47 per cent to 58,126. NSE benchmark Nifty rose 70 points or 0.41 per cent to 17,304.

In the 50-share pack Nifty, Eicher Motors was the biggest gainer, up 3.10 per cent. Titan, ONGC, Kotak Mahindra Bank, Hero MotoCorps and Reliance Industries were among other gainers.

HDFC Life Insurance was the top loser in the pack, down 2.31 per cent. Cipla, HCL Tech, Shree Cement, HUL, Hindalco, Tech Mahindra and UltraTech Cements were among those that traded in the red.

FACTORS DRIVING MARKETS
Yields, dollar flat: US treasuries have been cautious ahead of the data release, and in Asian hours on Friday the yield on benchmark 10-year Treasury notes was 1.2919 per cent compared with its US close of 1.294 per cent on Thursday. The dollar stayed pinned at month lows against a basket of currencies with the euro doing a fair amount of the work.

US jobs data: There is some caution ahead of the upcoming jobs data on Friday. The Labor Department will release the non-farm payrolls report for August at 1230 GMT. Solid jobs recovery is an important criteria for the US central bank to start paring pandemic-era stimulus measures.

Broader markets
Broader market indices were trading higher, outperforming their headline peers. Nifty Smallcap was up 0.56 per cent, while Nifty Midcap added 0.62 per cent. Broadest index on NSE, Nifty 500 was up 0.43 per cent.

Trident, Vakrangee, IRB Infra Developers, Exide Industries, Prestige Estates, L&T Tech Services were gainers from the space while Adani Total Gas, JSW Energy, Crompton Greaves, CAMS, Rites and Affle India were under selling pressure.

Global markets
MSCI’s broadest index of Asia-Pacific shares outside Japan was broadly flat in early trading in Asia having posted gains in eight of the last nine sessions as the benchmark edges back towards its position in mid July before Chinese regulatory crackdowns sent shares tumbling.

Japan’s Nikkei rose 0.38 per cent, and MSCI’s all-country world index edged higher having ended the previous session at its fifth consecutive closing high.

Australia was up 0.3 per cent and Korea rose 0.61 per cent while Chinese blue chips fell 0.27 per cent and Hong Kong dropped 0.6 per cent right after the bell, as traders try to balance weaker economic data out of China against the potential for future stimulus.



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Kotak Mahindra Bank sells 20 crore shares in Airtel Payments Bank for Rs 295 cr, BFSI News, ET BFSI

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New Delhi, Sep 1 (PTI) Kotak Mahindra Bank on Wednesday said it has completed the sale process of over an 8 per cent stake in Airtel Payments Bank to Bharti Enterprises for Rs 294.80 crore. On Tuesday, the bank had informed about entering into a share purchase agreement for the sale of 20 crore equity shares (nearly 8.57 per cent shareholding) of Airtel Payments Bank (APBL) to Bharti Enterprises.

“We now wish to inform you that the bank has completed the aforesaid transaction on August 31, 2021, for an aggregate sale consideration of Rs 294.8 crore,” Kotak Mahindra Bank said in a regulatory filing.

Kotak had bought these shares for Rs 200 crore in tranches during 2016 and 2017.

APBL was incorporated on April 1, 2010, and commenced operations as a payments bank from November 23, 2016. The company’s turnover was Rs 627.19 crore in FY20.

Shares of Kotak Mahindra Bank closed at Rs 1,745.80 apiece on BSE, down 0.49 per cent from the previous close.



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HC directs Kotak Mahindra Bank to ensure at least ₹1.80 crore balance in Afghan Embassy accounts

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The Delhi High Court has issued a notice on a plea by a construction company seeking attachment of movable and immovable assets of the Embassy of Afghanistan for payment owed to it. The company’s plea follows the the collapse of the Islamic Republic of Afghanistan government and its takeover by the Taliban.

The plea concerns the enforcement of an arbitral award against a foreign State, a matter on which the High Court had earlier ruled that a foreign State cannot seek sovereign immunity in a contract arising out of a commercial transaction.

Also read: India evacuates 168 people from Kabul

The counsel for the decree holder, KLA Construction Technologies Pvt Ltd which had carried out work in the Afghanistan Embassy for a consideration of ₹3.02 crore, submitted before the Court that considering the ongoing political turmoil in Afghanistan, the execution of the award in question had become doubtful due to which it is essential that the properties of the judgment debtor (the embassy) are attached in order to secure the execution of the arbitral award. KLA Technologies informed the Court that the exact amount pending payment pursuant to the arbitral award is ₹1.80 crore. The counsel for the embassy pleaded that they had no instructions and were unable to disclose the assets of the judgment debtor.

‘Unclear situation’

“…Coupled with the fact that the prevalent political situation in Afghanistan is not clear, this Court is left with no option but to take on record the details of the assets of the judgment debtors so furnished on behalf of the decree holder in the present application. Being conscious of the fact that the Special Leave Petition against the judgment dated June 18, 2021 (which held that foreign States cannot claim Sovereign immunity in commercial transactions) is pending consideration before the Supreme Court, to safeguard the interest of the decree holder, the Court directs Kotak Mahindra Bank, Branch D Block, Vasant Vihar, New Delhi to ensure that the total minimum balance in three accounts of judgment debtors shall not be less than ₹1.80 crore,” said Justice Suresh Kumar Kait.

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Kotak Mahindra Bank partners with Creditas Solutions for DIY Digital Repayment platform

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Kotak Mahindra Bank has deployed a secure, Do It Yourself Digital Repayment Platform for missed loan repayments, in a tie-up with Creditas Solutions.

“Powered by artificial intelligence and machine learning, the ‘Neo Collections’ platform delivers a personalised and non-intrusive experience thereby enabling customers to manage their dues seamlessly on their own through an intuitive repayment platform,” it said in a statement on Wednesday.

Using data analytics to target the right customer segments, the ‘Neo Collections’ platform creates hyper-personalised scenarios to connect with each customer, it further said. By clicking on the link received, customers will be directed to the platform that provides them with a consolidated view of their entire relationship with the bank and enables repayment of outstanding dues through a variety of payment modes, it added.

Also read: Kotak Mahindra Bank launches emergency personal loans for Covid treatment

“The main purpose behind deploying a DIY digital repayment platform was to make repayments for outstanding loans more convenient for our customers,” said Ambuj Chandna, President, Consumer Assets, Kotak Mahindra Bank.

Anshuman Panwar, Co-founder of Creditas Solutions said the platform is intuitive, using contextualised and optimised customer interactions, allowing Kotak to drive intelligent customer engagement for superior collections success at lower cost.

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