Kotak Mahindra vs IndusInd Bank

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Comparative Analysis of Kotak Mahindra Bank and IndusInd Bank

Introduction

Recently, there was a news of merger between Kotak Mahindra Bank and IndusInd Bank. Let us do a comparative analysis of financials of Kotak Mahindra Bank vs IndusInd Bank to get an idea of how the new entity will look like.

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Kotak Mahindra Bank vs IndusInd Bank

Core Operating Performance

Core Operating Performance
Comparison of Core Operating Performance
  • Kotak Bank scores over IndusInd Bank for above Core Banking Business Performance Indicators
  • Robust growth of Pre- Provisioning Profit by 31.4% for Kotak bank driven by both NII as well as Non-Interest Income growth

Balance Sheet Details

Comparison of Balance sheet
Comparison of Balance sheet
  • Company has recorded higher deposits growth of 12%, but advances growth is -4% YoY for Kotak Mahindra Bank.
  • Usually credit-deposit ratio between 80-90% is considered healthy, however due to COVID-19 scenarios, banks are conservative in lending and hence have reduced Credit- Deposit ratio.
  • Kotak Mahindra bank has comparatively lower credit to deposit ratio and hence looks more prudent and conservative in terms of lending.
  • Overall , IndusInd Bank looks more aggressive in terms of lending as compared to Kotak Mahindra Bank.
Deposits Mix
Deposits Mix
Deposits Mix
  • For IndusInd Bank, Term deposits growth is higher than that of CASA deposits growth. Term deposits are usually deposits bearing higher interest rates than CASA deposits.
  • On the other hand, Kotak Mahindra Bank has robust growth in CASA deposits as compared to IndusInd Bank. This will help the bank in maintaining its NIMs and thus have higher Net Interest Income (NII).
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CASA Ratio
CASA
CASA
  • Kotak Mahindra Bank is increasing its CASA ratio sequentially over the quarters and has higher proportion of saving accounts (~42%) as compared to current account (~15%) in its CASA mix as on Sept’20.
  • On the other hand, IndusInd Bank CASA ratio is mostly same over the quarters.
Advances Mix
Loan Mix (%)
Loan Mix (%)
Advances Mix (%)
  • If we take a look at the loan book of Kotak Mahindra Bank, it appears more diversified across retail and corporate banking.
  • However, for IndusInd bank, loan book is more concentrated towards corporate banking.
Capital, Reserves & Surplus
Capital, Reserves & Surplus
Capital, Reserves & Surplus
  • Here also, from capital reserves and surplus perspective, Kotak Mahindra Bank looks better placed as compared to IndusInd Bank.

Key Ratios

Net Interest Margin (NIM)
Net Interest Margin (NIM)
  • Kotak Mahindra Bank has healthy NIMs over the quarters , mainly because of higher CASA deposits in the deposits mix.
Cost to Income Ratio (%)
Cost to Income Ratio (%)
  • Earlier Kotak Mahindra Bank had higher Cost to Income ratio as compared to IndusInd Bank.
  • However, in the recent quarter due to operational efficiencies, Kotak Mahindra Bank is able to reduce its Cost to Income ratio significantly. 
Capital Adequacy Ratio (%)
Capital Adequacy Ratio (%)
  • As seen, Kotak Mahindra Bank appears to be much well capitalized as compared to IndusInd Bank. This is also evident from its conservative approach in credit underwriting.
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Asset Quality

Gross Non-Performing Assets (GNPA)
Gross NPA (%)
Gross NPA (%)
  • Both the banks have gross NPAs under control
Net Non-Performing Assets (NNPA)
Net NPA(%)
Net NPA(%)
  • As seen, IndusInd Bank performing well as compared to Kotak Mahindra Bank in case of Net NPAs.
Provision Coverage Ratio (PCR)
Provision Coverage Ratio (%)
Provision Coverage Ratio (%)
  • Both the banks look well placed in case of Provision Coverage Ratio (PCR)

Branch Network

No. of Branches
No. of Branches
  • On the basis of network, IndusInd Bank has wider presence as compared to Kotak Mahindra Bank



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