Strong PAT growth masks cautious posture; advance lag and slippage rise

Consolidated PAT ₹5487.1 Cr (+23.9% YoY); customer assets ₹6,45,812 Cr (+16% YoY)

4.53% reported; Q4 adjusted was 4.54% (after day-count normalization). Flat, not the 'moderate increase' prior guidance implied

46 bps this quarter; but slippages rose ₹1,321 Cr from ₹1,018 Cr QoQ. Portfolio mix/seasonal CV effect?

Cost-to-total-assets reduced YoY. Corroborated by 8% cost growth vs 9% NII growth

Cost of funds 4.46% (stable QoQ per transcript). But this is still higher than prior quarters—creeping up amid competitive pressure

Prior Q3 call: 'moderate increase before stabilizing.' Q1 reality: 4.53% flat. Management now refuses forward guidance, citing regulatory flux (FCNR, ECLGS).

Slippages ₹1,321 Cr (Q1) vs ₹1,018 Cr (Q4). Attributed to CV/tractor seasonality, but contradicts declining-credit-costs narrative and prior guidance of 'improving asset quality'.

Cost of funds stable at 4.46%, but this represents creep upward amid competitive pressure. Management framed as controlled; analysts questioned why growth lags peers.

Collections improving QoQ. Won't guide on growth but will maintain market share. Slippages reducing and pace improving Q-o-Q.

Organic PL growth is double-digit-plus; Standard Chartered run-down is drag. Cautious on business loans due to SME supply-chain stress. Growth accelerating from here.

Focus on average balances and granular, low-cost deposits. Kotak811 (SA) grew 32% YoY. Capital market slowdown impacted CA balances. Strategy is long-term, not template EOP.

Q4 adjusted NIM was 4.54%. No formal Kotak-specific NIM guidance, only industry commentary. Multiple variables ahead; won't quantify forward NIM.

Focus on high-ROE businesses and credit quality. Will deliver over-system including inorganic (Deutsche). Look at growth over longer period, not one quarter.

Don't know Deutsche's ROA; bought at attractive price. ROE accretion via capital deployment; full picture at Sep 2027 close.

Don't disclose detail. Strategy is cautious—start with personal loans, then cards. Focus is other products (insurance, investment) + secured cards doing well.

ECL one-time <2% net worth; flow +12-15 bps credit cost. FCNR early days, exploring supply/leverage strategies. Better picture next month or so.

Large part short-dated; CP/CD yields higher than bank loans. No PSL cost on CP. Floating-rate SA down 18% (offsetting fixed-rate SA growth). Mostly tactical.

Focus on internal sourcing via digital and branches. Risk metrics good. Maintain disciplined, profitable growth, not pursue volume at cost of ROA.

Day-count impact same as NIM; will adjust similar to advances. Evens out over the year.

Focus on rupee terms, not percentage. Won't sacrifice secured growth to hit %. Grew in absolute terms ₹707 Cr this quarter. Strategy: PL first, then MFI, then cards.

Declined to quantify forward NIM, citing regulatory flux (FCNR, ECLGS, ECL). Prior guidance of 'moderate increase' implicitly missed.

Slippages ₹1,321 Cr (Q1) vs ₹1,018 Cr (Q4), +30% QoQ. Yet credit cost fell to 46 bps from 93 bps YoY. Suggests either portfolio mix benefit or early-cycle turn in delinquencies.

Deposit growth 12% YoY vs system ~18-20%; cost of funds 4.46%, stable but trending up. Analysts noted Kotak lagging 150 bps below system.

NIM 4.53% flat QoQ. Cost-to-asset improved 17 bps (2.83% → 2.66%) but margin not expanding. Suggests asset yields compressed to offset deposit cost creep.

Advance growth below system; management framed as 'responsible growth' but analysts questioned if losing market share. 350 bps lag vs system is material.

ECL implementation will add 12-15 bps to credit cost flow basis. FCNR opportunity nascent (early days). ECLGS program complexity and potential discontinuation.