Leading private sector lender Kotak Mahindra Bank Ltd is sharpening its focus on SME and institutional businesses as key growth drivers, while leveraging the group’s diversified financial services structure to scale up its franchise.
The SME franchise, which accounts for nearly 24% of the bank’s advances book, continues to anchor primary banking relationships and deliver scalable growth with portfolio diversification.
Kotak, an SME Bank
“At its core, Kotak is an SME Bank. We have a comprehensive relationship-led business proposition across Corporate SME, Business Banking and Agri SME segments,” said Whole-time Director, Paritosh Kashyap during an earnings call.
The bank’s total SME advances book stood at around ₹1.2 lakh crore, recording a growth of 19% year-on-year. Corporate SME business grew 17%, while the Agri SME segment registered 15% growth driven by cross-sell opportunities and higher fee income.
Focus on logistics, infrastructure ecosystem
The commercial vehicle and construction equipment financing business is being managed as an independent product vertical within the bank and complements the SME franchise by expanding its reach into semi-urban and rural markets.
“We are among the top five financiers in the country in this space with a market share of 5% in CV and around 8% in CE segments,” Kashyap said.
According to him, the portfolio remains diversified, granular and pan-India, while investments in technology, process simplification and underwriting capabilities have improved turnaround time, scalability and customer engagement.
He added that the bank’s “House-Bank” approach continues to enable cross-selling opportunities across the bank and the wider Kotak Group ecosystem.
Watchful on macro environment
Commenting on the macroeconomic environment, Kotak Mahindra Bank Ltd, Managing Director & CEO, Ashok Vaswani said the bank remains watchful amid emerging economic uncertainties.
“We are taking a watchful stance, monitoring leading indicators, particularly at the lower end of the spectrum and potential second and third order effects. The bank is also closely tracking the possible impact of a lower-than-normal monsoon cycle this year,” he said.
“Our objective remains to transform the franchise for scale while building a responsible, well-governed bank, which generates return on equity in the high teens, aided with a couple of points of return on equity from the subsidiaries,” Vaswani said.