Kotak Bank's Plan To Buy StanChart India's Personal Loan Book To Aid NIMs, Total Income
Kotak Mahindra Bank had on Friday announced that it will be acquiring Standard Chartered Bank's Rs 4,100-crore personal loan portfolio.
Kotak Mahindra Bank's plan to acquire Standard Chartered Bank's Rs 4,100-crore personal loan portfolio will help the bank lift its net interest margins and total income, the management said in the July-September earnings call on Saturday.
"Besides NIMs, we are also getting 90,000 affluent customers, so clearly there are significant cross-sell opportunities and fee-based income opportunities in terms of insurance, mutual funds, and capital market products," Chief Financial Officer Dewang Gheewalla said, answering to a query from NDTV Profit.
"So, I think these are some of the opportunities that would also drive the total income."
On Friday, Kotak Mahindra Bank announced that it will be acquiring Standard Chartered Bank's Rs 4,100-crore personal loan portfolio, which is classified as 'standard advances' and the transaction is expected to be completed in three months, as per the statement.
"We have done our due diligence on the Standard Chartered personal loan portfolio... This is an important acquisition for us, and we look to do more on such transactions going forward," Managing Director Ashok Vaswani said.
The management also said that the strategy behind this acquisition is also the deeper penetration in the affluent segment, be it secured or unsecured. The bank will continue to look for such an inorganic opportunities and synergies in the future.
The bank's advances increased 17% year-on-year to Rs 4.2 lakh crore as of Sept. 30. Unsecured retail advances as a percentage of net advances were 11.3% against 11.6% a quarter ago.
The fall in unsecured retail advances, which is the high yielding segment, impacted the bank's margins. As of Sept. 30, NIMs of the bank were 4.91%, lower than 5.02% a quarter ago and 5.22% a year ago.
The announcement of this deal has come at a time when the Reserve Bank of India has been flagging risks on the unsecured loans like personal loans front and also increased risk weights to dissuade lenders from growing the books.
