I now hand the conference over to Mr. Udayko Duk. Thank you and over.
Thank you very much and good evening friends and colleagues. First of all, I wish each of you good health as we live through unprecedented times. I'm going to start today's meeting with first talking about the criticality in this battle of lives and livelihood. I think we are at such a crucial juncture in the Indian team at present that saving lives goes over everything else at this point of time. And it is in this context, I wanted to first share and talk with you about the people balance sheet, Which is even more important than the financial balance sheet in this juncture which we stand on.
I shared with you the kind of pain we have gone through at Kotak with the number of lives lost. For the period April to March 2020 to 2021 March, we lost out of our total 70,000 Thanks, guys. We lost 17 lives in a period of 1 year. Between April 1 to May to 2021 that is in a period of nearly 1 month. We lost 17 lives.
But what we lost in a year, We have lost in 1 month and that is the reality of the situation which we counter and face at this point of time. To Mr. Uday Kotak. In this battle, we at Kotak have first taken an immediate short term call that we will protect the lives of every single Kotak employee to Mr. Uday Kotak.
Thank you and over to Mr. Uday Kotak. We have tightened rules on the basis of which our people will work And we have currently taken a call that for the next 1 week, no person will move out of the home unless He or she is required by law to provide Essentials part of our services or needs to come with prior approval from senior management and both these are something which we are implementing over the next 1 week. We are making sure that all our people work from home In a digital and a virtual manner. And our call is at this point of time, we would not to Mr.
Uday Kotak. Want our branches which normally have 8 or 10 employees to work with more than 3. Similarly, We are taking a view that whether it is sales or collections that can be done by mobile or digitally And our employees will not step out and go for collection of sales and meet customers or prospective customers to Mr. Uday Kotak. We are putting their lives at risk as also our customers' lives at risk and we will monitor this week by week.
Every single Kotak employee's life is important for us and we will go all out and save it, especially in the current crisis and the context. And we will watch and evaluate every single week. And every one of my team here is committed to save to the lives of every quota type because that is the balance sheet which matters most to us. Coming to the financial part of our balance sheet and P and L, to Mr. Uday Kotak.
As we look at the year ended March, here are a few things which are extremely important about how we think about the financial situation. 1st, If you notice,
we
are structurally ready for a growth to If you look at the last quarter, which is January to March, we have grown at 4.5% to quarterly, which is 18% annualized. We've continued with our commitment on the mix and our view is we will fly through these Keeping in mind proper underwriting, right segments to lend, but to something we believe it's time for us to appropriately grow with a significant amount of ability to grow as we see to ourselves flying through these clouds. We are also very clear that there have been segments which we have been cautious on for the last 18 months And we believe that is work to our strategic advantage as we go forward. Our total unsecured lending, Which includes consumer loans, credit cards, microfinance loans, consumer durable loans, all put together unsecured retail lending, Which as of 31st March 2020 was 7.5% of our balance sheet is now down to 5.8% total of our balance sheet. That does not mean that we will not grow from flower.
We are in fact having our powder much drier. We are much lighter on this path and with tighter and proper underwriting standards, we are ready to continue our journey both in secured and appropriately in unsecured business. We are not daunted. We believe over to Mr. Uday Kotak.
We'll come back at some point of time and our hope today is this COVID Our curve which is sharply up like the UK comes down with that speed which may be end of June early July, that is our hope. Having said that, we will not make a mistake like many of us in India did, Which is declaring victory too early by January 2021 against COVID and we let down our guard as a country. I am committed to say that we will always factor in in our planning a risk of COVID 3.0 and not forget about it moment we see the economy recover. COVID is the key issue. We need to keep that in mind to Mr.
Uday Kotak. Even as we get out of it and even more importantly, keep a track on the speed at which India is vaccinating itself. I think that is one very important parameter for us to measure as we go forward. So for the measurement of what will make COVID less effective is the more critical part which we will watch as we plan our growth on the business side as we go forward. We believe we are very adequately stocked up on capital.
We have done a significant amount of work on digital And technology which is continuing even as I talk to you. We have considered this as an opportunity to meet that up and we are present and future to Mr. Uday Kotak. And I would like to also clearly state that growth both organic and inorganic It's something which we are very open to and with the capital adequacy in the early 20s with a Very good mix on the asset and liability side. Strong presence in a whole segment and to different segments of Financial Services business.
We believe that we can serve our shareholders, our stakeholders And the Indian economy in the days, months and years ahead. With that, I will request my colleague, Jameen Bhatt to take you through the specifics on the financial highlights and thereafter of course we will be open for discussion. Over to you, Jain.
Thank you, As Uday mentioned, this has been a pretty unprecedented year, something which we have not seen in our lifetimes. Over. So first take the year to year comparison. For the year 2021 which we closed, At the standalone bank level, we closed with a post tax profit of at the operating profit of INR12200 crores, which is about 22% higher than last year. We had a post tax profit in the bank of to INR 6,965 crores which is again 17% higher than last year.
As Uday mentioned, we continue to have a very strong CASA number at 60.4% as of the period end and this is in addition to our suite numbers which is another 7.5%. Strong capital adequacy continues from 17.9% which we were as of March 2020. We end with 22.3% and a very large part of this is Tier 1 Capital. Over. Our estimate 2 numbers again looking very small at 100 and 10 crores as against 96 crores a year ago.
If I look at the quarter, we end this quarter with a pre tax number of INR2,228 crores, which is 33% higher than 1 year ago. And similarly, our post tax profit of 16.82 gross this quarter is about 33% higher than 1267 a year ago. Net interest income this quarter at INR3843 crores, which is to Mr. Uday Kotak. 8% higher than
the same period last year.
This quarter, we have taken an estimated hit On account of the Supreme Court disposition on reversing interest on interest, compound interest and whatnot, we've over to Mr. Uday Kotak. Take an estimated Rota of INR110 INRII line in this quarter. So though this is effectively an expense for the period from 1st March 2020 to 31 August 2020, the hit has been taken in this period. After taking that hit into account, Net interest margin for this quarter, we end at 4.39%.
Our other income for this quarter at INR1950 crores, Which is recently up from what was there a year ago by about 31%. Our Fusion Services continue to grow INR1378 crores of which distribution itself is INR292 crores, which is about 25% higher than the same period last year. Over. The non fees and services part of other income showed a jump of INR572 gross this year this quarter, somewhat led by profits in the treasury segment of our business. Our O RAN expenses this quarter at INR2,385, which is roughly about 2.5% higher than what we spent in the quarter a year ago.
At the similar level again, We have spent INR8,584 crores of expenses, which is less than what we spent last year by about 3%. This quarter, we are somewhat ahead by the employee cost coming lower than last year and in the preceding quarter to Mr. Uday Kotak. By lower retirement benefits, thanks to interest rate changes and better returns on the funds invested. Over.
Operating profits somewhere going up this quarter as we've seen expenses to Life Recovery and results relating to acquisition of assets bring up also. Our total promotions we've taken in this quarter at INR1179 crores, which includes to Mr. Uday Kotak. INR 7.36 crores of what we saw is provisioned towards advances and the balance was towards the investment activity. We have not dipped into any of the COVID provisions which we made in quarter 4 last year and largely in quarter 1 of this year.
We end with a total COVID provision of INR1279 crores which is roughly about 0.6% of our overall advances. If you look at the credit cost without the COVID provisions, this year we would end with a total credit cost of 84 bps as against 67 bps for the period last year which is without the pool of provisions again. Our total provisions which we look at which is including specific standard, COVID and all of that Would cover about 95% of our overall gross non performing assets as of March Thank you, Wang. Advances for the year have grown by 1.8%, but during this to Mr. Uday Kotak.
We've seen advances grow by 4.5% not annualized. I'd request Shantu to take the digital slides before we get into the consolidated numbers, please.
Thank you, Jenny. I will start with our digital strategy and then the consumer of our bank. Our digital strategy is centered around customers with key focus on customer acquisition, engagement and experience. Let me start with acquisition. In the previous years, our main engine for digital customer acquisition was 811 and cable supposition, which will be through video surveillance.
This year we have invested and focused on powering other engines of customer acquisitions through payment, to lending and investment, thus enabling multiple customer agents. We will continue to power and add additional agents in future. To Mr. Udayko Dutt. To ensure a strong engagement platform, we invested in upgrading all our core systems this year, Including assets, both banking, trade, cash amongst others.
With the foundation in place, we have used extensive analytics to deepen our engagement with to Mr. Udayko Dutt. Including cross sell of products and services based on customer persona, propensity as well as focus on risk control controls over to the Techleen customer. We have worked on extraction of APIs from our upgraded core systems to help us in faster to Mr. Udayko Dutt.
Thank you.
And over to Mr. Udayko Dutt. Udayko Dutt.
Udayko Dutt:] Thank you. And over to Mr. Udayko Dutt. Udayko Dutt. To the proposition, I'm sorry.
The 3rd leg of our strategy is customer experience where we have invested on enhancing front end customer journeys to across our product platforms as well as build resiliency at our core and back end to ensure superior experience and scalability. We will continue to invest and build around this 4 digital business strategies and this is across retail, to commercial and wholesale facilities. Some few highlights on the digital side. We continue to see a to So as in customers using our digital channels with mobile being the preferred channel, we launched our revamped net banking platform, providing to Mr. Udayko Dutt.
We enabled several new digital journeys to help customers transact with us across liability, asset, payment and services. To you. In the service side, we have gained capabilities to serve our customers across voice and chatbot, WhatsApp banking and other Our 811 customers continue to use our digital channels extensively across the business products and services. Digital payments to UPI to Mr. Udayko Dutt.
Udayko Dutt. Thank you and over to Mr. Udayko Dutt.
Udayko Dutt:] Thank you and over to Mr. Udayko Dutt.
Udayko Dutt:] Thank you and over. Udayko Dutt:] continues to see a surge in both customer and merchant transactions. 94% of savings account transactions to Mr. Udayko Dutt. Now to liability.
Q4 was near normal across the branch to Mr. Udayko Dutt. In branch transactions have seen a 6th increase. Cash transactions continue to grow third by the business bank. Our average savings deposit growth YTD YOY is 27% and current accounts 17%.
To the focus has been granular customer growth. Our customer acquisitions saw growth during the quarter across physical and digital channels. We continue to to Mr. Udayko Dutt. Our CASA ratio, as Jamie said, was at 60.4% as of March 21 versus 56.2% last year.
SASSA and TV below 5 Stores comprised 91% of deposits versus 86% in Q4 last year. Suite deposits comprised 7.5 That's a 6.6% increase in 4 last year and the cost of savings is at 3.74% this quarter to Mr. Udayko Dutt. Our asset cross sell and distribution fee income showed strong growth in this quarter. We continue usage of analytics and CRM platform to penetrate and deepen our customers.
Digital adoption by all segments of our customers to Mr. Udayko Dutt. Moving on to consumer assets, mortgages and home loans. We continue our Charity and focusing on home loans. We ensured that customers got access to home loans at the right price, which made home loans buying easier for them.
We announced competitive rate of RMB6.65 billion in March, making us one of the lowest priced players in this segment. Our consistent focus on improving customer tax and rights pricing has helped us grow aggressively in the fleet. We had our best ever month in March to Mr. Udayko Dutt. We did
almost 3,000,000,000 of pre
COVID monthly originations. We focused on penetrating the salary segment, We showed significant growth in this quarter as well. Home loans will continue to be a very big area of focus for us. Last, to you, sir. February March were our best of announced in last year.
This has traditionally been an area where we have downwind both in terms of market share and credit quality, We enable many digital journeys on the mortgages side, which have helped us acquire our customers through the digital. Over to MSLE Working Capital. In keeping with economic revival, we saw demand pick up across certain segments like exports, auto ancillaries, light And even some impacted segments like Tektan, utilization in cash flow improved as well as the demand for some CapEx terms. To our new acquisitions happening month on month. We will continue our focus on building a quality franchise in this important MSP segment.
To Mr. Udayko Dutt. Turning to Unsecured's credit card. Both spend and new acquisitions have bounced back in credit cards in this quarter. We have been focusing on strengthening our technology back in the past.
In the month of March, we successfully completed migration of our existing to the 3rd year end platform to the latest upgraded platform, which has helped us access a large stack of APIs, which we are currently using for innovation and enriching our product to personal loans, we saw month on month growth in volumes in this quarter. And in March, we were back to 80% to 80% of our peak COVID level. Consumer Finance. This business has made strategic strides in the last 2 quarters in the online and offline distribution. With deep analytics end to end digital journey and curated risk models, this business has to Mr.
Udayko Dutt. We will continue to build this business as we get into the next year. Selection, last quarter saw both bounce rates and resolutions pretty much back the pre COVID level across products. We continue to invest in technology, analytics and capacity enhancements to grow our consumer asset to Mr. Udayko Dutt.
I now request Karnan to take you through the commercial financials and business highlights.
Thank you, Shanti. I'll begin with the CV business first. Commercial vehicle sales in quarter 4 have been better than quarter 3 of FY 2021, though they have been lower by around 20% for the entire year. Our disbursements during the quarter have been to Mr. Uday Kotak.
Higher than the previous quarter. Capacity utilization in the goods segment continued to be good in quarter 4. However, current wave of COVID localized shutdowns in various states, utilization may get impacted in many other. Passenger vehicle segment continues to be impacted and most of the vehicle in these segments are off the roads. It may take some more time for this segment to show some to improvement.
Election efficiency for the commercial vehicle business as a whole has improved during the previous quarter And they've been as good as pre COVID times. But currently, though can impact collections in the near term. Demand for construction equipments continued to be good during the quarter 4 driven by government infrastructure projects. Our disbursements during the quarter has been higher than the previous quarter. Customer cash flows have been good in this segment and collection efficiency during the quarter has improved over the previous quarter and is back to pre COVID levels.
Localized lockdowns in the current COVID wave may impact activity in this segment in the short term. Demand for credit in our agri SME segment continues to be good driven by improved levels of activity and to consumer demand for essential commodities. Cash flows of customers during Q4 was good and our collection efficiencies were normal. To Mr. Uday Kotak.
Predictions of a normal monsoon is a positive for this segment of the business. Microfinance disbursements and collections were normal to Mr. Uday Kotak. In quarter 4, both collections and new disbursements have been impacted in the month of April. Factor volume grew 26% during FY 2021.
Our growth in disbursements is better than industry growth. A good harvest has ensured good rural cash flows and this in turn has ensured our collections during the quarter was good and to the collection efficiencies where near normal. We'll have to wait and just observe what is going to happen in the light of recent developments in these markets. I now hand it over to Manayam to take
the
call. Thanks, Kanan.
On the corporate side of the business, as we discussed last quarter, we of course remained cautious in the 1st 4, 5 months of this year, But then the trend turned around and we did build the book from its lows in the month of July August and we built it Until December in the last quarter, of course, we saw extremely high pressure on pricing and The pricing was essentially unsustainable kind of level where we think after building our PSL cost, It was not viable to be building that book to give us the right risk adjusted returns. So if you broadly look at the if you add the trade substitutes and the corporate banking book, we have maintained a flattish book in the last quarter. On the SME side, of course, last quarter, like I said last time as well, I think we are Beginning to see good traction both in terms of NTB as well as in the growth of the book therefore to Mr. Uday Kotak. And the book did grow in the last quarter.
However, the utilization levels in this book continued to remain over. No, which of course is positive from the quality of the book perspective, but from the growth perspective, we are not yet seeing the benefit of higher utilization. Trisha. So, of course, we continue to focus on our customer level wallet share of the more profitable products over to the customer wallet and therefore our focus on transaction banking continued to remain good. Throughout the year, to the car remained robust, the growth in current accounts remained robust and foreign exchange business After a poor Q1 when of course all activity was at scale, picked up and continued to do well all through the next three quarters.
We were in fact able to improve our pricing on transaction banking products and non fund based products. Over. Our focus also on building a wholesome corporate franchise continued and it continued throughout the year. Over. DCM had debt capital markets had a record year.
In fact, Both in terms of we almost had no underwritten book left in our books. Were able to sell down almost every transaction we did in the year and we recorded record revenues in the year. And our efforts to synergize various businesses across the group on the corporate franchise to Mr. Uday Kotak. Also continuing to be extremely good throughout the year.
Of course, the biggest story of course was the asset quality, to Mr. Uday Kotak. The corporate sector overall corporate as a segment retained very good resilience throughout the COVID-one. We'll watch the COVID-two carefully, but if you really look at the credit cost, they are probably lower in a COVID year Compared to even normal years and even segments like CRE and SME continue to show great resilience and our over. We think our portfolio stands up well in the current circumstances.
Of course, the new COVID situation we will keep watching it as it evolves. But right now we are quite happy with our credit quality in Look, of course, because of all this, we have been able to maintain an end the ROE on this business And also post a reasonable growth in profits. The other thing we are focusing This year and we'll continue to focus through the next 12 to 18 months is upgradation of technology in this business. I think both in terms of internal efficiencies as well as improving customer proposition, there is a lot that is possible and we want to be ahead of the curve on this. If you look at the sectors, we did raise our to Mr.
Uday Kotak. On the NBFC sector, we did get comfortable in this sector though a significant part of that increase was also in the housing finance sector, which we are comfortable the sector has held up quite well on asset quality and we are quite comfortable. And our exposure is also the increase is coming out of really high rated very, very high quality HFCs. CRE, if you notice, our exposure has actually slightly moderated. And LRD, and it is one product where we think Of course, they are very, very finely priced.
It's a very finely priced product and therefore in some parts of LRD which is Essentially commercial space, office or retail, I think we are cautious on what will happen to some of this rationalization of office spaces and retail space rents. And therefore, we have been cautious and we can see our exposure has dropped in this sector. Just quickly I will cover also the Kodakim and the Capital Company position because as I said our effort is to develop a franchise, corporate franchise, which is more holistic. So corporate bank, Immersion Bank, DCM Mr. Uday Kotak.
And institutional equities are all part of that franchise and we have a unique franchise when we synergize all of them together. So of course, the Kotak Mehta Capital Company did extremely well on the ECM side of the business. It was a record year again on the ECM business. We did several marquee mandates as you can see And we continue to maintain dominant share and franchise in that group. And In fact, most of our issues that we did, almost all of them have also delivered post listing performances which are excellent.
Over. However, of course, advisory revenues were slightly muted not only for us but overall in the industry, it was muted. While we have a great pipeline, we expect to get closure on some of these advisory mandates in the coming year and therefore we remain optimistic about
the future revenues in
this business. Overall, this franchise is doing extremely well and we to Mr. Uday Kotak. Uday Kotak:] Thank you and over to Mr. Uday Kotak.
May I now hand it over back to Jainen.
Thank you. Kenny? Sure. Thanks, Mani. If I come to the consolidated numbers, We end this financial year on March 21 with a post tax profit at the group level of 9,990 cross, Which is about 16% higher than what we did in FY 2020.
For this quarter, we ended the period with to INR 2,589 crores which is about 36% higher than what we did in quarter 4 last year. The non banking entities contributed 35% of the total profit. By non banking, everything other than the bank, the subsidiaries and associates put together got in 35% of our post tax profits. Of the entities which contributed other than the bank, Kotak Securities brought in INR241 crores this quarter, which is almost 50% higher than what they had done INR163 crores in the same period last year. We also ended the year with a profit of INR 7.93 crores, 11.5 crores.
The life insurance company Brought in INR 193 crores of post tax profit at the shareholder level in quarter 4 as against INR165 crores last year. Kotak Prime brought in INR 184 crores and becomes INR 161 and Kotak Investment INR 73 then INR 77. You. Both these again like the bank took the pain off the interest on interest reversals both in Kotak Bank and Kotak Investments. And again, like in the bank, we have not dipped into the COVID provisions which we had created last year and early part of this year in either of these 2 NBFCs.
The mutual fund business which is both the management company and the trustee company put together over. Got IN INR 100 crores of profits this quarter and INR 346 crores for the year as a whole. The international companies contributed INR50 crores of post tax profit for this quarter as against INR30 crores for the Q4 last year. At the overall level, the advances at the group level at INR 2 lakh to INR 52,000 crores and customer assets at INR 2,68,000 crores, which is about 4.8% higher than what we did in the to a year ago. At the group level, our net interest margin at 4.45% for this quarter
to Mr.
Uday Kotak. And the G and P level of 3.22 gross and net at 1.23 for this quarter, I compare this with the immediately preceding quarter. These were 331 132 respectively. Having Healthy capital adequacy ratio at the group level too, 23.39% overall with a Tier 1 itself of 22.65. To Mr.
Uday Kotak. Our capital and reserves at the group level now at 84,836 crores. Almost all our subsidiaries are pretty well capitalized and servicing their growth of business on their own. Book value per share now as we end the year is at INR 4.36 per share.
Over.
I'll request Gaurav to take you through the insurance highlights, please. Yes. Thank you, Zhemit. And let me first take you through a management change at Kotak Life Insurance. Mr.
G. Muralidar, who was our managing director for last 10 years, superannuated on 30 April 21 and we have appointed Mahesh Balasubramaniam as the new Managing Director. Mahesh has been in Kotak for last 15 years and his immediate prior assignment was a Managing Director of Kotak General Insurance division. Let me first in terms of performance take you through the embedded value, which is the Indian to Mr. Uday Kotak.
IED, which grew by 17.7 percent to INR 9.869 crores. It is backed by a value of new business of INR691 crores during the year 2021 with a margin of 28.6%. As you all know, the margin is basically a function of product mix and which has been very balanced for us in terms of to ULEAP and traditional plans and within traditional plan between participating and non participating products. It is also important to highlight that the share of risk premium with an individual or at a group level as a percentage of total premium 26.6 percent during the year. On quality parameters, if you look at our Persistency.
On the 5 data points between 13th month to 16th 1st month, I think We were leading the industry in 1st 4, which is between 13th 49th month and it gives us a very strong conservation ratio of 85%.
If you look at in
terms of the performance of immediate quarter and full for the whole year, Our profitability improved by 17% in Q4 from INR163 crores to INR 193 crores and for the entire year at 14% over to S692 crore. If you look at our net worth across INR 4,000 crores And giving us a very strong capital adequacy of 2.9%. In the Q4 2021, the APE growth grew from INR 600 crores to INR 827 crores, Given the growth rate of 37.8 percent, the group business also improving the last quarter by Our individual renewal premium grew in the 4th quarter at 8.5%, but before the entire year it was at 11 point to Mr. UMO policyholder grew by 34.2% to 43,000 And individual protection share at individual level grew from 4.8% to 5.8% year on year. Now let me take you through our digitization effort.
I think our Digitizing effort last year has been focused more on empowering distribution, energizing employees and superior customer experience. The entire post COVID-nineteen scenario actually in fact helps us in terms of accelerating the entire process. Our digital onboarding of customers to Genie is nearly completed 95%. We also introduced a ad for our advisors, which is called Boost and which Help the adviser in terms of improving their efficiency and the utilization in the 1st year moved up to nearly 50% to 60%. In terms of recruitment, because that's been very critical activity in terms of our agencies, We completely introduced a new platform for onboarding the advisers and You may know, but we are one of the top 3 recruiters of advisers in the agency business.
In terms of superior customer service, now DigiPro, which we launched in Q4 'twenty one, which is nothing but integrating entire journey of the customer onboarding. And now it is completely paperless digital customer onboarding backed by video calling for verification And also using the digital liveliness check and face mesh technology. In a group business, we are very critical in current times. We have introduced in store claims and 60% of our claims today are getting settled in In 2 days, which is very critical in this environment. Digital servicing channel is a normal thing like on the Chatbot and all that we continue to see higher traffic.
Now I hand over to over to Uday Kotak.
Thank you, Gaurav. Hello, sir. Good evening. I'm here to talk on the Codis Securities number. For the quarter ended March 21, Uday Kotak Securities achieved a total income of INR 5.70 crores.
This is compared to INR 470 crores in the previous quarter to Mr. Uday Kotak. And INR462 crores for the quarter ended March 2020. The total income for FY 2021 now Stands at INR 20 20 crores versus INR 1690 crores for FY 2020. Profit before tax for this quarter is INR321 crores compared to INR245 crores of the previous quarter to Mr.
Uday Kotak. And INR 2.18 crores for the quarter ended March of 2020. PBT for the full year INR1057 crores versus INR738 crores for the full year FY 2020. Tax for this quarter is at INR241 crores as compared to INR184 crores in the previous quarter ended INR31-twelve-twenty And compared with INR163 crores for the quarter ended 30 onethree2020. PAG for the full year now is INR 793 crores This was INR550 crores for the year ended March 2020.
Our market share in the cash segment for FY 2021 to Mr. Uday Kotak. Our overall market share including futures and options for this quarter is 2.2%. To Mr. Udayko Dutt.
The market volumes over the last 12 months have been phenomenally high for the full of luxury actually. The average daily volumes calculated for the market has been INR2247,000 crores for this quarter compared to to RMB17 lakh crore for the previous quarter and RMB1059000 crores for the corresponding quarter last year. To Mr. Uday Kotak. The jump is more than 2x in the last 1 year.
COVID Securities did a market volume it had an average market volume daily to Mr. Uday Kotak. INR 49,256 crores this quarter compared to INR 33,793 crores last quarter And INR 25,603 crores for the corresponding period last year. I would also like to highlight some of the digital updates which for the security has taken last year. The Tradefree plan was launched in October November last year, which is one of the cheapest plans in the industry for derivatives and intraday traders.
The DIY or the do it yourself account opening was again launched somewhere around the same time, to Mr. Uday Kotak. Where a customer now can open his trading account fully digitally and start trading in 60 minutes flat. The new mobile app to Mr. Uday Kotak.
Launched of COVID Securities is built on the latest technology stack with faster speed, improved features and enhanced product offerings. The new direct mutual fund platform also launched, which enables clients to invest in mutual funds through the direct route
to Mr. Udayko Dutt. At a far lower expense
ratio, the platform to invest in the U. S. And global equities was also launched in the middle of last year. For the last quarter, total 93% of accounts were opened digitally by Kotak Securities. Thank you, Prem.
With this, I will hand over to Kanab to talk on the vehicle financing.
Thank you. Kotak Mahindra Prime had a profit after tax to Mr. Uday Kotak. Crores this quarter as compared to INR149 crores in the previous quarter. Profit after tax of INR535 crores for the entire year.
Disbursements during the quarter has been higher as compared to the previous quarter as well as the same quarter last year. Demand for cars continue to be good and amid supply constraints. The current wave can impact demand in the near term, but it is expected to stabilize soon thereafter due to an increased preference for to Personal Mobility. Basement margins during the quarter has been good and collecting efficiency in quarter 4 was as good as the peak over time. I'll now hand it over to Nilesh to speak about the asset management business.
Our total AUM grew by 26% year on year to INR234,798 crore at the end of to FY 2021, our equity assets under management grew by 25% year on year to INR97,997 crore. Our total AUM market share increased by 40 basis points to 7.3%. This performance reflected in our profit after tax growth of 14% year on year to touch INR 100 crores. For the full year FY 2021, our total assets under management Grew by 17% year on year. Our equity assets grew by 13% year on year to Mr.
Uday Kotak. And profit after tax grew by 3% year on year. We recorded positive equity sales in FY 2021 Even though mutual fund industry registered negative equity sales in FY 2021, to our SAP market share continued to rise in terms of volume as well as value throughout FY 2021. Our asset management across mutual funds, insurance, alternate, PMS and offshore grew by 43% year on year to INR 323,762 crores. Relationship value of our wealth, priority and investment advisory business grew by 41% year on year to INR 3,82,000 crores.
I will hand it over to Jai Min Bhatt to take this forward.
Thank you, Milish. We should be willing to take questions now.
Thank you very
much. We will now begin the question and answer session. Over. Participants are requested to use handsets while asking a question.
Ladies and gentlemen, we will wait for a moment while the question queue assembles.
The first question is from the line of Adesh Parashrampuria from CLSA. Please go ahead.
Hi. Uday, a couple of questions. Firstly is on the RBI group that is recommended that some of the
over. Mr. Udayko Duk.
So sorry to interrupt, but can you speak closer to the handset, please? Your voice is a bit feeble.
Sorry, hopefully this should be better. So Uday, two questions. So first is on the Ramdesh, there is a roadmap till December 2023 post that we will have A management change requirement basis what the RBI has come out with. Any comments you would like to make on what the RBI has put out, to the transition plan. I know it's quite far, but just wanted to get your comments on that.
Thank you. Let me first say that as things stand today, the current term Which has been approved by the RBI as of December 31, 2023. Let me assure you that over. The bank and the board are fully aware of the situation and I would like to assure you and all the stakeholders that the institution is committed to long term institution building and shareholder value And all the steps which the bank will take will be consistent with ensuring a continuity of the to growth in shareholder value and stakeholder value as we go forward. I would also like to wear my hat to Mr.
Uday Kotak. Also as a and promoter family and shareholder to say that we are committed long term shareholders and Just wanted to say that we will continue to be long term shareholders as we see this particular bank and institution. We will take whatever are the necessary steps as we go forward. And rest assured to both from the point of view of the bank as an institution and us that is me and my family as significant shareholders, We are committed to continuing long term value for all the shareholders of the institution.
Got it. And the second question is more to do with little more 2, 3 year view about The ability and willingness to grow, right. So I think over the last 2, 3 years, our cost of funds have come down. We've been more than willing and we can see that in numbers the growth coming in mortgages as cost of funds have been low. You today spoke about That you can at some point do cards because you have a liability base as well.
So just wanted to understand where we stand today both in terms of cost and fund and OpEx And from a 2 year perspective, what segments, right? The mortgage has accumulated a couple of quarters, but From an ability and willingness perspective, today, ability is able to do everything. Billingness is will be in different shape, right? So How does that change over the course of the next 12 months?
Right. Okay. So we have to really look at the call which we had as a management in the month of October. When we signaled a significant clear focus on assets as a strategic area for growth. And post that if you look at the quarter January to March And look at our growth rate on an annualized basis, it is 18% per annum, which is 4.5% per quarter.
To Mr. Uday Kotak. Within that, if you see the mix at this stage of the cycle has been much more the secured piece relative to the unsecured piece. I would like to share with you here that we are significantly building up our IT and digital capacity and capability in this period. And we actually believe that we will fly through the clouds without being scared necessarily Of what is happening disproportionately around us because we have confidence in our underwriting ability.
And we see this As an opportunity from a business point of view, we actually gained share certainly in the Secured fees, but we are also beginning to smell more opportunity in the unsecured fees with to Mr. Uday Kotak. We are therefore Not necessarily at this stage taking a view that this COVID 2.0 is something which is going to change our view at this stage. Of course, we will watch the situation carefully as I said right at the beginning. Our current view is and I hope we are right for all our sake that this is a sharp spike to Mr.
Uday Kotak. But like what you saw in the UK, there could be a sharp drop by June or July in terms of the new cases. To Mr. Uday Kotak. In terms of protecting lives, everything we can in the short term.
But in the medium term, we are not changing strategy with reference to our strategy on asset growth, secured and even unsecured. Over. I was actually believing that this could be a bigger opportunity, thanks to COVID-two point four. Having said that, We are very clear that we will not let our guard drop and certainly factor in a potential risk of COVID-three point zero. We will also monitor The vaccination progress and the efficacy of vaccination in terms of to Infection and morbidity.
For a lot of our evaluation, we'll parallelly look at the reality of COVID Even as we move forward flying through the clouds, I hope this gives you a sense about how we are thinking about the future over. As a significant opportunity while not letting our
over. This is useful. Thanks a lot.
Thank you. The next question is from the line of Rahul Jai from Goldman Sachs. Please go ahead.
Yes, hi. Good evening everyone
And I hope you, your families are staying safe.
A couple of questions actually. First of all, the housekeeping stuff, can Can I know the slippages at the standalone level for this quarter as well as previous quarter, please?
Ram, let me take that. Actually previous quarter, you are aware about the Supreme Court and all of that. So there was no NPA which was kind of declared for the quarter at all. So that's previous quarter is not relevant. So if you then look at for the full year this year, we have about INR 5,400 crores as against about INR 3,400 full year last year.
This quarter, we would have taken about this half year, therefore, You'll have taken about R4400 outcroze.
Got it. And Jamin, can you also share the write off numbers During this quarter and second half?
So second half would be about 530 odd crores. Bulk of it has been just under INR 500 crores has been this quarter.
And this would predominantly be unsecured I presume, right, cards and PL etcetera?
To Mr. Uday
Kotak. Okay, got it. The other question is this provision for investment that we have made, INR 400 odd crores, what exactly is this item? It's pretty lumpy.
It is both on investments as well as it would include an amount of provision on security receipts which we carry. So it is the treasury investment book as well as the securities. Both of them are included there.
Okay, okay. So treasury would be mark to market
And the SR will be the realized losses.
Not realized losses. These are asset provisioned. Okay, over.
The other is a bit of a strategic question going forward. So Uday, you talked about the ambition to grow, etcetera. But COVID-two point zero, of course, has been unprecedented. Any stress test that we have done so far? What could be any impact?
Because nobody knows how this episode plays out And maybe it might be too early for you all as well. But nonetheless, have we done any stress test analysis? And at the same time, Last time the RPI and the government did rollout ECGLS, there was a moratorium given And restructuring was also allowed. Do you think this time around also we may need some of those measures?
Over. I think it's a very important strategic view about how all this will play out. So, Rahul, here is my sense on the stress. If you look at our book and the credit cost without considering COVID provision for the full year, It is 84 basis points versus 67 basis points of last year. Now out of that, if you look at it, the bulk of it to Mr.
Uday Kotak. Actually the credit cost has come a lot of it has come in Q4. Now why has it come in Q4? The moratorium period was from 1st March till 1st September. Therefore, Potentially weaker accounts in the moratorium period went into some sort of an NPA, to you.
Primarily, assuming there was no Supreme Court stay, would have gone into an NPA, a lot of it would have gone into an NPA in Q3 December. However, the way we provide provisioning, particularly for our retail side is Very aggressive provisioning in my 180 days. So a lot of that provisioning on the retail side, which we do as to sort of almost like a formula. She takes the bulk of the provisioning plan on that book in 180 days. Now 180 days gets over post September 1, a lot of it got over in February March.
And that led to higher formula provisioning, which you can see in terms of our higher provisioning non COVID in quarter to Q4 versus quarter 3. If you look at the numbers in the P and L and look at the non COVID provisioning, Quarter 4 is a number which is higher than quarter 3. For example, sorry, on specifics, if you look at quarter 3, The provision on advances was INR 4.61 crores. Yes, provision on advances in quarter 4 is INR 7.45 crores. A lot of it is flow through of the moratorium book and the 118 day period getting hit where we take a sharp jump in provisioning.
For example, on commercial vehicles, we provide on a truck 100% provisioning at the end of 180 years. As long as it is retail below a certain amount in rupees crores. So that kind of and at the end of 90 days, the provisioning is relatively lower. So 90 to 180 day, we do a scale up in provisioning, which is what has hit higher in the quarter 4. Despite that, if I take the full year average, That is 84 basis points versus 67.
And that gives us a reasonable confidence to us in the quality of our book. Of course, COVID 2.0, what it does to the corporate side, I hope it doesn't do damage. But what has been extremely infusing for us to Mr. Uday Kotak. Is that any corporate which has had the ability of raising capital including stressed sector corporates, they have the ability to withstand the shock much better than the non corporates.
The corporate book has held up remarkably well. The ECLGS book, we actually believe has done well and we I'm very comfortable with the and also keep in mind that is guaranteed by the Government of India the incremental book which we have got. And some of it has also helped us keep many of those accounts being able to continue and function as they are. So at this stage, We have got significant comfort in the quality of our book and we believe actually it's a great strength which we have to be able to take the shots at just Keeping in mind 84 basis points annual cost in a COVID year. Moving to the specific point you asked But what does it mean from a stress testing point of view?
COVID 2.2 is a question which we have to ask. Is it a short one Or is it a prolonged one or is it there is 3.0 coming in September. Those are the questions which we need to have good answers to. However, What I personally believe and this is something I genuinely feel that if there is stress On the book of a bank or a financial institution, the answer is that financial institution has to take a judgment call to Mr. Uday Kotak.
Is my borrower in a position to be in better off if I restructured his account And give him a little longer time to pay. And while I restructure his account, I must provide and take the pain upfront. I'm not subscribed to this theory that I will restructure accounts for borrowers only if the regulator gives me some dispensation. My decision on my borrower's ability to repay if I give him a little more time should be based on the facts of the case, not whether the RBI gives me more time on that restructuring and before I provide the work. Originally in my view has to be a must because the shock The system must be taken on the chin and the answer for financial institutions is not relaxation by the regulator over to Forbearance by the regulator, but the answer is capital, capital, capital.
The capital has to be a shock absorption For the stress of the book and restructuring has to be done based on assessment of ability of the borrower to pay, it will give more time. That has to be the basis of strategy for financial institutions rather than waiting for votes from regulators for forbearance.
Over. Got it. That's very comprehensive and very clear. Thanks. Just one more question about the inorganic opportunity, right.
Now we have created a fantastic laboratory side franchise. On the asset side, it is while It started growing, but still seems like at the early stages. So from the inorganic side, you talked about cards, etcetera. Any other asset segment that comes to your mind which because I guess the acquisition if at all would be More determined by what the value proposition you are getting on the asset side and on the customer side, right. So how are you thinking about on that front because Again, if I were to just superimpose the big picture view, consolidation seems to have begun and you definitely have And upper hand in that process.
So how are you thinking about that?
I think the answer to consolidation is clear. What we look out for is customers and capabilities, not physical branches. I think you're getting into a world where I think When I say I have 1600 branches, I think it will be a liability if I had 10,000 branches. And that's very clear because I think the digital and technology change is going to make the density of branch network requirements more to Even for current account customers, for savings account customers as Shanti shared with you, 94% of the transactions have moved outside the branches. So we are seeing a whole new world where you're buying into franchisees with customer ownership and strength in certain product areas and that's what we are to be open for.
And I just wanted to say that we are very open for organic growth And inorganic growth, we are open for business as long as it makes sense, but we are patient. I mean it took us a long time which we worked and prepared on Before we acquired India's largest private sector banking merger, which is INB by Shingbank into Kotak. But when we did it, we did it With a lot of thinking and deep analysis and high focus on execution. So we are looking, but we are Very clear what we want, what is the value proposition and how we will execute.
Got it. Got it. Thank you so much and wish you
all a good luck.
Thank you. Next question from the line of Suresh Ganpati from Macquarie. Please go ahead.
Yes, thanks. First on the promoter CEO question, I just wanted more clarification. So Uday, would you look at 1 year before the tenure expiring, is the NRC looking at possible candidates or how will this work? Over. Sudesh, we are 2 years, 8 months from that day.
At work level, it is to Mr. Uday Kotak. It depends. It's like the classic glass half full half empty. Okay?
So the current to renewal from RBI is 2 years 8 months. Okay? Okay. So we will certainly and let me assure you, It goes back to the point I said, we do think long term. We think strategic.
We evaluate all options. And whatever we do, we will do it in the interest long term interest of all our shareholders. And this is a deep DNA and a commitment from the institutions and it is
a similar view to Mr. Uday Kotak.
Which the shareholders have or the promoter shareholders have, which is long term view towards their investment in this institution, which over to Mr. Uday Kotak. Okay. Just a technical clarification, Uday, on this. Mr.
Deepak Gupta's Sir, tenure, if I were to count as a 15 year old time director ends on what date? So Mr. Deepak Gupta and I, Both our tenure ends on the same day, 31 December 2023. 15 years as a whole time director, right? Over.
No, no, no. I'm talking about the current up to 10 hours from RBI. We have letters in writing that our current 10 hours is up to The current approval from RBI is December 31, 2023. Perfect. Okay.
Now the next question okay, the last question is on mortgages. Of This looks like a margin dilutive product considering that you're giving up for the lowest rate of 6.6, But compared to any other products, obviously, this looks like margin dilutive and perhaps it may look negative on your margin overall company margin perspective. But how do you look at it from
a product profitability perspective?
Do you think a mortgage can give you a similar ROE as compared to that of an SME or some more shell banking or say any personal loans, just curiosity because it should not be ROE or ROE dilutive, right, Uday? So just wanted to understand that. Yes, I think a very, very, very fair question. Let me first tell you what we believe. We believe Residential mortgage is the centerpiece for a customer relationship.
And It gives us a poke into our customers long term around which we can do many, many things. Okay. Therefore, Mortgage itself is a very important product to sustain or consolidate a relationship. I mean, Suresh, I don't have to tell you the story of Kopi Televators. Yes, of course.
Yes. The money is on the maintainer. Yes, yes. Okay. So having said that, I would also like to mention one other point.
COVID has to transform the importance of the form in the life of every consumer. And that is something which we are also keeping And we are going to go relentlessly at building the mortgage business even as we build other businesses around it. And simultaneously with the to the cost of funds provisioning we have and a continuing improvement in our cost of funds is a factor which is also an important point as we become far more competitive in highly secured long term product. We have not ever strong secured product, but we believe the anchor product for us in a home mortgage or a secured core secured loan. That does not stop us from building SME working capital.
We will do all that. Let me also today give you a little perspective on our approach And long term orientedness. We went out with a savings deposit, 1st of the block, over. 4th opening up in 2011, our Capa ratio was probably Very, very low because we were a relatively newer bank. And we were relentless from that level to today to build our savings product and our CapEx product to now over 60.4%.
Over to Mr. Uday Kotak. And in the bargain, over the years, many, many analysts have said, Uday, why are you guys wasting so much money on your SA acquisition. It would have cost the firm 1,000 of crores of higher SA we would have paid compared to many of our competitors. But 10 years later, we believe that strategy has been vindicated.
Our approach to any product including a mortgage product It's medium to long term. We will go relentlessly at building it and along with it all the other paraphernalia Which we think will come along with it both on the asset side and transaction side. And that is how we think about it. We do not think for the next quarter, half year, 1 year. Over.
Pursuit of mortgages is 4th part of our strategy going forward. Yes. Sorry, just to follow-up, I hope there is I'm getting cold calls or balance transfers. I hope all these checks and balances are in place when you're going about doing this over. It's done really well in the last couple of quarters.
And hopefully there is an adverse selection of assets in a pandemic environment, right? So you're absolutely right. We have to careful about it and over. Sudhak, if you pick up any signs of that, please give Jameen or me a shout or Shanthi a shout and we will attend to it straight away. Okay.
Great. Thanks, Sudhak.
Thank you. The next question is from the line of Shanthand Momek from Pine Ridge Investments. Please go ahead.
Hi, thank you for this opportunity. My first question is a data keeping question. Just wanted to to know the total customer franchise of the bank and how many customers we've added over the last year? And if you could also compare it with customer over to the solutions in FY 2020. That's the first question.
Second question is,
thank you for elaborating on the various steps we're taking to ensure our employees are safe. If you could also highlight what the bank is doing to support the community entering this period of Sai. Okay. I think I will take the second one first and then I will ask Jemin and or Shanthi to speak, talk about the customer acquisition. On what we're doing for the community, I think I'm happy to report to you that between We have completed our full CSR of 2% this year between the amount of money we have actually spent or projects we have identified and which we have put in to our CSR escrow account that is full spend of 2 percentage points from a number which last year was less than 1%.
And I wanted my colleague Deepak Dosa who has run it with passion to talk about what we have done on CSR in the current year and thereafter between Jameen and Shanti on the customer acquisition. Deepak? Yes, Sharpen. This year and last year, the activity has primarily been on the Health side and livelihood side, these are the two ones which were really tamed to events in the marketplace and all our resources we really put on them and it's really Spread wide and distributed widely across the country. So right from the simplest of them that is over.
Distributing the masks, the PPEs, the ventilators, the oxygen concentrators, those are the elementary ones Right up to trying to support setting up hospitals and private primary healthcare centers. So it is primarily being on the health side, and I think looking ahead given the way COVID-two point zero is going, I think That part of the activity will be the predominant one even this year. Apart from that like I said Last year we also played a large part on livelihood. Basically what we found really is a lot of workers particularly in the Unorganized sector or even for the organized sector, yes, basically the money covers and all We're being shunted out and sent back. So we ran a very interesting program for a couple of months really towards the end of COVID-one We have a monthly salary payment so that it is there.
Basic needs Our maintenance needs really are connected. And like I said, going forward this year, We see a lot of that being necessary to continue. Over. So, Damian, we didn't have the
customer number straight away.
Well, roughly we are adding about 500,000 customers every month really.
I'll just broadly add to what Deepak said. This is across largely on the liabilities. So if I take liability assets and you wanted the YOY number, I will revert. That's about the
number you can take across digital, physical, every channel that we do. So about 5 lakh customers a month, give or take?
Yes.
Okay. Thank you.
Thank you. The next question is from the line of Saurabh from JPMorgan. Please go ahead.
Sir, just one question on the corporate banking fee. So we are seeing some of the your biggest peer group It's actually going by double digits. And I'm guessing pricing pressure will be there for them as well. So And your cost of funds is actually about this piece for next year. Thank you.
Right. I'll get my money and to answer this, but before let me give you some reality check. Okay? Today, if I had overnight surplus as a bank, I have the ability of putting money with the RBI in reverse repo at 3.35%. Then if I wanted to take a little 10 or a risky basis and I went for it 90 days 'nineteen, assuming I went for a 6 month, I would get somewhere between 3.5 and 3.6.
And against that, a lot of short term corporate lending to the top end customers and Maniyan will confirm this is going at 4% today. Top end corporates 90 days. Now if you take 4% lending rate for 90 days I'm assuming it is crossing any quarter. There is a priority sector lending obligation, Which includes not only 40% priority sector but also includes agriculture and micro. To Mr.
Uday Kotak. The annualized effective cost of that is anywhere between 40 to 60 basis points on a margin. And on top of it, whatever is worth, we are taking a trended exposure and leaving capital. So whether we do some deals at 4%, 4.1%, that's great. I can do a very large book of crores to But on a relative value add basis, is it adding value?
Today, a foreign exchange swap is giving me higher returns, okay, which means if I convert rupee to dollars and do a swap, the return on the swap is Higher than 3.8%, 3.9% for a similar season. I am asking the question that Are we in the business of purchasing loans and advances to show loan growth or are we in the business of creating value for our shareholders sustainably? With that I will hand over to Banyan.
Yes, if you recall in my commentary earlier, I did mention about The Q4 pricing pressures and the PSLC costs in my commentary, Uday explained the details of that. So over. Let me put it this way. We have the relationships, we have the access, we have the ability or we get a look in to every deal that happens in the market or every client that does the transaction. So it's not about our to the ability to source those deals or be in the mix.
The issue is whether it is accretive or not from our point of view. In fact, if you recall, just a while back, I was making a reference to this exactly that we are extremely focused on our This is just a return on capital and we don't think a 4% transaction at the end of the year crossing a quarter his work doing given our cost of funds. So we have to make the right choices. So we focus on making sure that we are getting the right revenue wallet share from the client. And as I said, therefore, we have been able to maintain our ROE, very healthy ROEs in this business and growth in profits.
Both we have been able to achieve even during this year And we feel that is more important and the franchise with the corporate is not necessarily in doing
to Mr. Uday Kotak. So we remain focused on profitability.
Sir, and your comment on the SME business, I mean, that is I mean, then the user better there, that is just caution right now or Because again we have seen balance
for you versus the others.
So if you see SME in the last quarter there is growth. From December to now there is growth clearly if you see the last quarter and we continue to We intend to keep building that. There the pricing pressures are not as bad as some of the corporates. In fact, there are segments which are not even high rated, but the pricing is poor. In the corporate side, SME
is not like that.
And in SME we have reasonable comfort on pricing.
Okay. So fair to assume that SME book at least will
start growing. Mr. Uday Kotak. So even the corporate book, we think if you see the medium term growth in the corporate book, Of course, COVID here is aberration, but if you see the medium term growth in the corporate book, we've been growing it at the mid teens kind of growth rates. And like in better cycles, we can grow that faster and then the pricing affords growing faster.
Like I said, it's not about access or ability to get a look into the deal.
Got it, sir. Thank you.
Thank you. The next question is from the line of Kunal Shah from ICICI Securities. Please go ahead.
Yes. Hi. So just sorry, again, I said with respect to mortgages, Okay. Be it in terms of the customer acquisition, consolidating the relationship and looking at more of on a media business and get competitive. When do we see we would get as well?
Because maybe it's also getting the corporate relationship Trying to consolidate and the way the government is also focused in terms of the investment, shouldn't we take this Opportunity as well, no doubt in the earlier question it was highlighted, but just trying to wake the comfort which is there on the housing to be equally competitive, that doesn't seem to be a reflection on the corporate side. So just want to get the sense of that, yes.
Should I go?
Yes, Manjun, go.
Yes. So we don't see our corporate franchise exactly the way we thought. I mentioned that during my commentary. We see our corporate franchise as an integrated franchise over. Corporate lending, Investment Banking, Institutional Equities, our corporate franchise is quite unique.
Actually there is no other competition which has 4 legs as strong as we have. So we don't look at the corporate franchise as just Building a book which does not give enough ROE. The way we look at it is whether we are doing more things with the corporate across all these four next that I talked about and that's the way we look at it and we think we are building a fairly unique corporate franchise,
Mr. Uday Kotak. P. Vijay Kumar:] Yes, In the case of the corporate, the relationships are all there. The franchise is already deep.
In the case of mortgages, we are getting new customers and new relationship. Over. I'm not selling him one more home loan. I'm selling him the first home loan and hence Other relationships will get built around that.
That is why there is
opportunity of deepening, expansion and cross selling. In the case of corporate, we name a corporate and we will probably have a fair share of our relationship And this list with that cost base. That doesn't mean if we have given him INR 100 crores, we should go ahead and give him INR 500 crores. Yes, that's the difference.
Sure. Sure. And 2 more questions. One is on the net NPL side. So laid out The overall GNPA has also gone up.
But where do we want our net NPA to settle? No doubt we have a contingency buffer, But 1.2, 1.3 compared to where it was earlier. We are at 63% coverage, but would there be a plan to inch it up further? And second on the inorganic opportunity side, maybe on the credit card and Citibank portfolio, if you can comment on that.
So on the level of net NPLs, we will take a call on the basis of what we think is recoverable on a present value basis. We believe our loans are recoverable and on a reasonable present value basis. That's how we will value. Finally, a net NPA is a number of what we believe Recoverability of the underlying loan. And if a particular lender believes the recoverability is low, Then you better provide more.
If you believe the recovery is better, you provide accordingly. But it has to be a pretty honest answer about what we think it is. And we believe that our net NPA reflects what we think is a recoverable debt that you owe on a reasonable present value based on judgment. And that's how we think primarily about net NPS. It's because we have been a lot in the distressed asset business.
So we know that What is the fair value of a loan is the present value of the money we'll collect from that loan at a point of time. And that's the 2 way you measure on the med NPA part of your book. As all we know is business, We are looking at a lot of stuff which comes our way, but we will be focused and we will be consistent with creating value. I mean you are aware that we took a long time before we did the inorganic which I talked about ING when you signed 2015. We also need the strategic investments in NPS.
So we are patient, but we are ready to move When we see the opportunity is real. And we've also given you another perspective that in today's world, the changing world, to Mr. Uday Kotak. The physical branch network is marginally important compared to the value of customers and products and value specialization which a target may give us.
Sure. Yes. Okay. Thanks a lot. And would that be the perspective in terms of the branch expansion because few of the other private Thanks, we had seen maybe they're adding on to the branches, but our take has been maybe in terms of the branch additions, it has been minimal.
So now would there be the stance that maybe it's not more about the physical but getting it done?
We measure on branch expansion and the primary driver for branch Pancho will be current account markets and SME markets as a focus, okay, and high transaction markets. You'll be relatively less excited about opening too many branches around savings account markets, if you understand what I mean.
Over. Sure. Got it. Okay. Thanks a lot and all the best.
Yes.
Thank you. The next question is from the line of Sumit Kariwala from Morgan Stanley. Please go ahead.
Hi, good evening Uday and team. Over. Congratulations on strong earnings. I had a question with respect to return ratios over the next 2, 3 years. The bank obviously has to Mr.
Uday Kotak. One of them was interest rate and it was very well executed last year. I had a question with respect to operating leverage. You highlighted how grounds can be a liability in digital will help sourcing incremental business. My question here is how should we think about cost Through the next 2, 3 years as we accelerate to 20%, 25% kind of loan growth, is it fair to expect significant operating leverage And do you have a 3 year cost income ratio in mind?
Sumit, you're absolutely right. There is a significant opportunity for us to increase our operating leverage. Okay. And you are in the equities business, our operating leverage works better than anybody else, Institutional Equity business, once the costs are reasonably loan and the brokerage revenues go out of the roof, You just get everything straight to the bottom line. And our view is physical will be more measured.
It is going to be much more around Customer product digital experience on a strong technology base. And If at all we will be spending more money, it's going to be in these areas and we are not going to stop that spend in the short to medium term For really what I think is a significant catch up where our competition may not just be other banks, our competition has to be to Tech players of the future and present and how they are playing the game and how do we learn from them. I think Indian banks have a unique opportunity to Mr. Uday Kotak. While we continue to be regulated, how do we transform and transcend to be a customer oriented product tech player And while we still have the cover of being a regulated bank and that is the journey we need to do.
We need to be ready to spend present for that, but I don't think the Spend which we require for something in that area is anywhere near 10,000 physical branches. Over. We clearly see the advantage of operating leverage as we add a lot more products You have raised organic or inorganic?
Very organic. Thanks a lot.
Thank you. The next question is from the line of Roshan Chutke from ICICI Prudential Asset Management. Please go ahead.
Over to
Mr. Uday Kotak. I can't hear you, Roshan. Mr. Roshan, sorry to interrupt, but maybe request you to move to a better reception area, please.
Hello? Is it better?
Yes, sir.
Yes. So firstly, on OpEx cost, what explains the declining of employee OpEx? The second question is In the investment provisions, what proportion of it is because of the security seats hit? And then I will talk about that if
you complete these first two questions.
I think Jenny will answer that question, but on this investment provision, remember There is a other income profit line which has grown and there
is an
investment provision line. You need to look at both also because some parts of it maybe an accounting requirement to show it both as income and over to Mr.
Uday Kotak. Yes. So what Uday said is right. So you should look at the fact that there is a spike in the other income also which is to Mr. Uday Kotak.
Of the overall number there in the provision item, the security receipt would be to Mr. Uday Kotak. In about 50, 60 odd quarters, it's a smaller amount. On the operating expenses, If you look at the year on year, for the full year, the expenses have been lesser. But if you look at the quarter itself, the expenses have picked up as activity levels So overall for the year, the Q1 had a lot of savings which we've got.
So for the year, yes, we We spent lesser than what we would have spent for the whole year last year. But as we get to Q4, we've actually caught up and the expenses In this quarter, which we've talked about as overall operating expenses, we are higher than both last year and the last quarter. And in fact, some of that was helped by the fact that the employee cost came down, as I mentioned earlier, thanks to the retirement benefits being lower. And of course, we some of the employee benefit costs are also linked to stock option the stock option appreciation rights which we give out,
over.
I'm sorry, Harshan, I didn't get you.
How much is the decline in retirement provision?
Retired provision, if you look at for this quarter versus The previous quarter, it's a decent amount. I mean, we had a benefit coming both from the interest rates on pension as well as the fact that the retirement benefits were invested and overall some of the equity returns subbed up from the fact that the NAVs of the investment portfolio went up. So if you look at for the year this year versus for the year last year, There is a decent INR 200 crores plus of retirement benefit sale. But overall, as I was coming to it, on the other operating expenses, while there There has been savings on the fact that activity levels in the initial period, quarter 1 particularly was lower. While this quarter, as I said, the non employee cost is actually 12% higher than last year.
Some of it, of course, coming from the fact that Things like deposit insurance. Deposit insurance is linked to the total deposits you have on OQ Insure. You. So to that extent that has been a spike and in addition to that you'd also seen the rates on the ICGC going up by 20% over the last year period. So those are the costs which have actually gone up.
Some of the areas which we've actually also seen going up is relating to repossession and recoveries as well as things like brokerage which we pay for home loans and others. Some of the other expenses we've been concerned. So it has been a mix. So don't go by the fact that overall it has been lesser last year, some of it helped by activity levels which were lower especially in the initial part of the world.
Over to Mr. Uday
Kotak. We move to the next question from the line of Nilanjan Karwa from Nomura. Please go ahead.
Hi. Thanks for the opportunity. Two data questions. Jamin, if you can to take this up. One is the overall ECLGS, I think, maybe I missed, right, you can split it also between ECLGS 12.
2nd, on the full year NPL movement, if you can split the slippages of INR5400 between the 3 buckets of loans that we disclosed, which is the consumer, the rural and the corporate. And if I can also have the write off number for the full year. And the third, the Obviously, we talk a lot about savings, but if you look at on the year end to year end basis for last 5 years, We have actually aggregated the least amount of savings in FY 2021. Would this how do you look at that? Does this it definitely therefore means that The lowering of rates has probably some impact.
And therefore, as a contra, Whenever the economy recovers, it would mean that you will have to also raise rates and get those savings back. Is that how you would want to
think about it? Thanks. So on the savings side, I'll pass again first this one. On EC and GS, overall, we have We've dispersed something like 11,500 crores. So that's an overall number which we did for Mahoganyar And it is spread across the ECGS 1 and 2.
And if you look at the overall increase of the assets book on the CISG accounts from them, it is much lesser than that RUB 11,500,000 which we have discussed out. Stipijas, we talked about it at about 5,400 of course for this year Versus about 3,400 last year. Honestly, we haven't been giving the breakup of what the slippages have been. But overall, I talked about the fact earlier also that she's had slippages increase in the unsecured businesses, Which is disproportionate to the overall size of the unsecured book. And you talked about the write off.
I mentioned earlier about the fact that this year we have overall write off of about INR 625 crores As against about RMB900 that you have caused in the previous year. Right.
On the savings deposit, I would like Shanti or Mirad to answer.
Yes. So can I just comment on that? So there are 3 parts to this in the reasons I'll say. In the Q1 of last year, our Acquisitions, NTV got impacted and the value buildup typically happens in Q3 and Q4. 2nd, actually in the first half of last So we had a huge buildup of balances and we saw a large investment in consumption throughout in Q3 and Q4, right.
And to some HNI and large money put out on account of the interest rate. The combination of all of this is what has been the growth rate that you saw in the Q. So having said that, as we said, we are back on our acquisition track in Q3, Q4 and you will see the value taken up from here. But these were broadly the reasons that we see and be safe. Over.
Vida, would you like to add anything?
No, no, I think these are the 3 primary reasons. Over.
How large is the if I can add, how much how large is our NRI portfolio to? I mean, if you have if you can just
over. Can you just I will have
it ready or you want to give
it something. No, I'll come back to you on the NRI.
Sure, Naveen.
We will be over to Thank you. Ladies and gentlemen, due to time constraint, that was the last question. I now hand the conference over to the management for closing comments. Okay. I think thank you very much.
This has been a long meeting. It's been 1 hour 40 minutes. These are exceptional times. My view is we really need to take this I think at clearly two levels, people level to Mr. Uday Kotak.
And business level and as we go after the business, we need to once again constantly say that the people level is even more important. And with that, I wish every one of you safe safety and good health. And hopefully, When we meet next time, we will have a much better situation of the pandemic. Let's pray for that and let's all of us work hard towards making sure that we save lives and save livelihoods. Thank you very much, ladies and gentlemen.
Thank you. Ladies and gentlemen, on behalf of Kotak Mahindra Bank, that concludes this conference.
Thank you all for joining us and you may now disconnect your lines.