KOTAK MAHINDRA BANK 2022-23 Annual Report Analysis

Mon, 17 Jul

KOTAK MAHINDRA BANK has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the bank during the year 2022-23.

KOTAK MAHINDRA BANK Income Statement Analysis

• Interest income during the year rose 24.9% on a year-on-year (YoY) basis.
• Interest expenses were up by 24.7% YoY during the same period.
• Operating expenses increased by 10.6% YoY during the year.
• The bank's net interest income (NII) increased by 25.0% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a growth and stood at 5.0% in FY23 as against 4.7% in FY22.
• Other income increased by 4.2% YoY during the year.
• Net profit for the year increased by 23.5% YoY.
• Net profit margins during the year declined to 35.4% in FY23 from 35.8% in FY22.

KOTAK MAHINDRA BANK Income Statement – 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Interest Income	Rs m	337,406	421,511	24.9%
Other Income	Rs m	249,411	259,910	4.2%
Interest Expense	Rs m	115,535	144,111	24.7%
Net Interest Income	Rs m	221,871	277,399	25.0%
Operating Expense	Rs m	304,093	336,450	10.6%
Pre-provision Operating Profit	Rs m	167,188	200,859	20.1%
Provisions & Contingencies	Rs m	47,869	53,054	10.8%
Profit before tax	Rs m	159,483	196,462	23.2%
Tax	Rs m	40,164	48,657	21.1%
Profit after tax	Rs m	120,894	149,250	23.5%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	4.7	5.0
Net profit margin	%	35.8	35.4

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KOTAK MAHINDRA BANK Balance Sheet Analysis

• The bank's deposits during FY23 stood at Rs 3,612.7 bn as compared to Rs 3,100.9 bn in FY22, thereby witnessing an increase of 16.5%.
• Advances for the year stood at Rs 3,591.1 bn as compared to Rs 3,044.7 bn during FY22, a rise of 17.9%.
• Cost of deposits for KOTAK MAHINDRA BANK rose 8.9% and stood at 3.3%, while yield on advances rose to 8.6%.
• The lender's investments rose to Rs 1,953.4 bn during the year from Rs 1,645.3 bn in FY22.
• Borrowing stood at Rs 570.3 bn, a growth of 3.4% as compared to previous year.
• Overall, the total assets and liabilities for FY23 stood at Rs 6,204.3 bn as against Rs 5,465.0 bn during FY22, thereby witnessing a rise of 13.5%.

KOTAK MAHINDRA BANK Balance Sheet – as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	971,340	1,122,541	15.6%
Advances	Rs m	3,044,736	3,591,075	17.9%
Deposits	Rs m	3,100,869	3,612,726	16.5%
Yield on advances	%	7.4	8.6
Cost of Deposits	%	3.0	3.3
Investments	Rs m	1,645,294	1,953,380	18.7%
Borrowings	Rs m	551,599	570,339	3.4%
Total Assets	Rs m	5,464,979	6,204,297	13.5%

Current Valuations for KOTAK MAHINDRA BANK

• The trailing twelve-month earnings per share (EPS) of the bank stands at Rs 75.1, an improvement from the EPS of Rs 60.9 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 1,898.6, stands at 24.1 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 3.4 times, while the price to income ratio stands at 8.5 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Income per share (Unadj.)	Rs	170.0	212.2
Earnings per share (Unadj.)	Rs	60.9	75.1
Diluted earnings per share	Rs	60.8	75.1
Avg P/E ratio	Rs	31.8	24.1
Avg P/ABV ratio	Rs	3.7	3.4
Avg Market Cap	Rs	3,849,946	3,602,620
Dividends per share (Unadj.)	Rs	1.10	0.75

Ratio Analysis for KOTAK MAHINDRA BANK

• Efficiency Ratios

  Credit/Deposit Ratio: The bank's credit/deposit ratio improved and stood at 99.4x during FY23, from 98.2x during FY22. The credit/deposit ratio tells us how much money a bank has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The bank's debt to equity ratio decreased and stood at 3.73x during FY23, from 3.76x during FY22. The debt to equity ratio of a bank tells us how much debt a bank uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): KOTAK MAHINDRA BANK's capital adequacy ratio (CAR) was at 20.8% as on 31 March 2023 as compared to 22.7% a year ago. This ratio helps measure the financial strength of the bank or any finance company to meet their obligations using their assets and capital.

  A bank that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the bank's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a bank sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the bank is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that banks hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the bank improved and stood at 13.3% during FY23, from 12.4% during FY22. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the bank improved and stood at 2.41% during FY23, from 2.21% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the bank improved and stood at 13.86% during FY23, from 12.79% during FY22. The ROCE measures the ability of a bank to generate profits from its total capital (shareholder capital plus debt capital) employed in the bank.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a bank's gross NPAs to gross advances. KOTAK MAHINDRA BANK's gross NPA ratio stood at 1.8% as of 31 March 2023 compared to 2.3% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a bank's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the bank has made provisions.

  The net NPA ratio of KOTAK MAHINDRA BANK was 0.4% in financial year 2023. This compared with 0.6% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Credit/Deposit Ratio	x	98.2	99.4
Debt to Equity Ratio	x	3.8	3.7
Loans / Deposits	x	0.2	0.2
Capital Adequacy Ratio	%	22.7	20.8
Return on Equity	%	12.4	13.3
Return on Assets	%	2.2	2.4
Return on Capital Employed	%	12.8	13.9
% of Gross NPAs	%	2.3	1.8
% of Net NPAs	%	0.6	0.4
Yield on Advances	x	7.4	8.6
Yield on Investments	x	7.0	5.5

To see how KOTAK MAHINDRA BANK has performed over the last 5 years, please visit here.

KOTAK MAHINDRA BANK Share Price Performance

Over the last one year, KOTAK MAHINDRA BANK share price has moved up from Rs 1,787.6 to Rs 1,898.6, registering a gain of Rs 111.0 or around 6.2%.

Meanwhile, the S&P BSE BANKEX is trading at 51,292.0 (up 1.4%). Over the last one year it has moved up from 40,074.0 to 51,292.0, registering a gain of 11,217.9 points (up 28.0%).

Overall, the S&P BSE SENSEX is up 24.4% over the year.

(To know more, you can check out historical annual results for KOTAK MAHINDRA BANK here and quarterly results for KOTAK MAHINDRA BANK here)