NEW DELHI: Kotak Mahindra Bank is expected to improve its credit and funding profile over the next 12 months despite some impact on growth and profitability due to the RBI's ban on adding new customers online, S&P Globa Ratings credit analyst Nikita Anand said on Friday. Will be able to.
In April, the Reserve Bank of India (RBI) had barred Kotak Mahindra Bank from issuing new credit cards and on-boarding new customers online.
Anand said S&P's core belief is that the bank should be able to manage the impact on its credit profile and the lender has made significant progress in technology enhancements over the past 18 months, including the addition of senior level executives such as chief technology officer. Appointment is also included.
However, it will take time for the bank to implement the changes highlighted by the RBI and conduct a comprehensive external audit to address RBI's concerns, he said.
“Nonetheless, this will continue to have an adverse impact on the bank's credit profile over the next 12 months... We believe that over the next 12 months we should be able to offset the negative adjustments and allow the bank to manage credit The profile in general and the funding profile in particular, despite some impact on growth and profitability, should be able to recover, Anand said in a webinar.S&P has a Standalone Credit Profile (SACP) assessment of 'BBB-' on Kota Mahindra Bank and this includes a negative adjustment for the RBI action.
“We believe the restrictions may impact the bank's credit and deposit growth and profitability. Credit cards are a high yield target growth segment for the bank and they have been growing at over 50 per cent compared to loan growth of 19-20 per cent. Therefore, Anand said, "there will be some impact on growth."
However, credit cards make up a small portion of total debt at 4 percent.Also the bank is not restricted from cross-selling of products to existing customers.
Additionally, the share of customers added online was generally lower than the total new additions, Anand said.
In April, the Reserve Bank of India (RBI) had barred Kotak Mahindra Bank from issuing new credit cards and on-boarding new customers online.
Anand said S&P's core belief is that the bank should be able to manage the impact on its credit profile and the lender has made significant progress in technology enhancements over the past 18 months, including the addition of senior level executives such as chief technology officer. Appointment is also included.
However, it will take time for the bank to implement the changes highlighted by the RBI and conduct a comprehensive external audit to address RBI's concerns, he said.
“Nonetheless, this will continue to have an adverse impact on the bank's credit profile over the next 12 months... We believe that over the next 12 months we should be able to offset the negative adjustments and allow the bank to manage credit The profile in general and the funding profile in particular, despite some impact on growth and profitability, should be able to recover, Anand said in a webinar.S&P has a Standalone Credit Profile (SACP) assessment of 'BBB-' on Kota Mahindra Bank and this includes a negative adjustment for the RBI action.
“We believe the restrictions may impact the bank's credit and deposit growth and profitability. Credit cards are a high yield target growth segment for the bank and they have been growing at over 50 per cent compared to loan growth of 19-20 per cent. Therefore, Anand said, "there will be some impact on growth."
However, credit cards make up a small portion of total debt at 4 percent.Also the bank is not restricted from cross-selling of products to existing customers.
Additionally, the share of customers added online was generally lower than the total new additions, Anand said.
