Kotak Mahindra Bank Ltd.

Performance Analysis for the period 20

PROFITABILITY ANALYSIS Mar-16 Mar-17

Rs. (in 000's) Rs. (in 000's)

1 Total Assets 2,408,035,759 2,761,875,587

2 Earning Assets
Balances with RBI 69,249,004 75,122,255

Balances with Banks in Deposit Accounts 4,961,302 30,946,014

Balances with Banks & money at Call & Short Notice 21,272,970 135,647,844

Balances with Banks Outside India 20,510,808 14,169,377

Investments + 702,738,989 684,615,381

Advances + 1,447,928,152 1,671,249,109

Total Earning Assets 2,266,661,225 2,611,749,980

3 Interest bearing Liabilities

Saving Deposits 294,947,214 415,039,313

Demand Deposits 230,587,178 274,668,149

Term & Other Deposits 833,953,209 865,692,522

Borrowings 437,297,936 496,899,092

PolicyHolder's Funds 151,482,783 187,928,768

Total Interest bearing liabilities 1,948,268,320 2,240,227,844

Equity Capital 9,171,911 9,204,489

ESOP outstanding 34,136 18,676

Reserves 324,434,499 375,703,944

Minority Interest 3,955,985 4,744,261

Total Equity 333,640,546 384,927,109

5 Interest Income 204,016,360 223,242,067

 6 Interest Expenditure 111,229,729 114,575,099

Non-interest operating income 76,307,283 116,595,592

10

11 Non-interest operating Expenditure 108,940,849 142,454,072

12 Provisions and Contingencies 25,841,852 33,317,656

^----Provisions for Non Performing Assets 7,524,200 6,816,100

Profit After tax 34,311,213 49,490,832

Fixed Assets including Goodwill, if any 141,374,534 150,125,607

Balance sheet Total 2,408,035,759 2,761,875,587

Other Liabilities and Provisions 122,170,908 131,976,373

Profitability Ratios

Return on Assets
1.42% 1.79%
NI/ TA

Equity Multiplier TA/ TE 7.22 7.18

TE/ TA 0.14 0.14

Return on Equity
10.28% 12.86%
ROA X EM

NI/ OR 0.45 0.42

OR/ TA 3.17% 4.22%

TA/ TE 7.22 7.18

Return on Equity
10.28% 12.86%
NI/OR*OR/TA*TA/TE

(II - IE)/ TA 3.85% 3.93%

(OI-OE)/ TA -1.36% -0.94%

Provisions/TA 1.07% 1.21%

Return on Assets
1.42% 1.79%
(II-IE)/TA + (OI-OE)/TA - Provisions/TA

(II- IE)/EA 4.09% 4.16%

EA/ TA 94.13% 94.56%

Net Interest Margin

3.85% 3.93%
(II-IE)/EA*EA/TA

Net Interest Margin

3.85% 3.93%
(II - IE)/ TA

II/ EA 9.00% 8.55%

IE/ Intt Bearing Liab 5.71% 5.11%

Intt Bearing Liabilities/ EA 85.95% 85.77%

Spread
3.29% 3.43%
II/Earning Assets - IE/Interest bearing liabilities

Efficiency ratio

Non intt exp/ (Net Interest Income+Non intt Income) 64.43% 63.24%

Risk Ratios

Credit Risk = Provisioning / Assets 0.34% 0.27%

Capital Risk = Capital / Assets 13.85% 13.94%

Total capital ratio= (Total equity + Long-term debt + Reserve

14.93% 15.14%
for loan losses)/Total assets

Provision for loan loss ratio= PLL/ TL (provision for loan

1.87% 2.09%
losses/total loans and leases)

Loan Ratio = Net loans/ Total assets 60.13% 60.51%

Gross NPA's 28,381,100 35,786,100

Nonperforming ratio= Nonperforming assets (nonaccrual
1.96% 2.14%
loans and restructured loans)/Total loans and leases

SALARY 28,040,000 27,440,000

Operating efficiency (cost control)= Wages and salaries/Total

14.95% 11.87%
expenses

Other Financial Ratios

TAXES PAID 16,887,018 21,095,250

PROFIT BEFORE TAXES 50,237,444 73,319,347

Tax rate = Total taxes paid/Net income before taxes 34% 29%

Source of Data:
All the data has been obtained from the Annual Reports of Kotak Mahindra Bank Ltd. for the period 01.04.2016 to
https://www.kotak.com/en/investor-relations/financial-results/annual-reports.html
 Pranjal Gupta PGFC1923
for the period 2016-2020

Mar-18 Mar-19 Mar-20 Trends Analysis of Financial Ratios (R

Rs. (in 000's) Rs. (in 000's) Rs. (in 000's) CAGR (%) Short descript

3,377,204,737 3,951,712,481 4,431,727,117 16.47%

89,335,019 109,109,235 95,132,346 8.26% Safest A

Relatively risky than RB
40,631,354 55,745,287 70,897,205
94.43%
91,187,535 91,751,995 434,458,390 112.58% Subject to interest rate

22,852,415 56,038,096 40,310,542 18.40% Subject to fluctuation

909,766,020 1,034,870,206 1,111,969,130 12.16% Carries defaul

Most risky assets class c
2,059,973,244 2,434,619,939 2,498,789,578 14.62% risk, in
3,213,745,587 3,782,134,758 4,251,557,191 17.03%

655,292,031 796,847,139 1,046,085,934 37.23% Bank pays lower inter

317,102,115 382,792,778 421,484,398 16.28% Bank pays no interest on

Bank pays agreed amoun
939,963,848 1,068,602,689 1,136,431,745 8.04% the duration of deposits
Bank's borrowings in the
586,039,735 664,389,383 655,767,168
10.66% interest i.e. co
Insurance policy liabili
224,253,361 274,178,120 315,088,169 20.09% intere
2,722,651,090 3,186,810,109 3,574,857,414 16.39%
9,528,243 14,543,774 14,565,192 Equity share cap
12.26%
21,680 20,728 28,654 -4.28% Part of equity to be allott
495,332,422 568,253,545 656,776,002 19.28% Accumulated

-100.00%
504,882,345 582,818,047 671,369,848 19.10%
251,310,773 299,347,627 334,741,610 13.18% Interest received on lo
 124,668,478 151,866,056 159,006,795 9.34% Interest paya

136,822,314 160,443,503 168,915,750 Income from invest

21.98%
Salary expense, rent, ele
161,634,936 191,714,249 204,851,517 17.10% ex
40,358,318 45,013,854 53,728,199 Amount set aside to meet an
20.08%
6,672,100 9,223,800 15,663,400 20.12% Amount set asid

61,471,355 71,196,971 86,070,849 25.85% Net Income generated

163,459,150 169,577,723 180,169,926 6.25%

3,377,204,737 3,951,712,481 4,431,727,117 16.47%
149,671,302 182,084,325 185,499,855 11.01%
Analysis of Financia
ROA shows the ability of management to gener
assets i.e. loans and advances of the bank. This
continously from 1.42% in 2016 to 1.94% in 20
1.82% 1.80% 1.94% management in optimum utilisation of banks fu
profits.

Equity Multiplier shows the assets financed usi

capital structure. The lower the ratio the better
multiplier indicates that the bank is using a high
6.69 6.78 6.60 assets. Since this leverage is on a declining tren
2020. It is a good sign for Kotak bank.

This shows that total earning assets as well as f

financed using borrowings and deposits from th
0.15 0.15 0.15 better. It has remained stagnant for the past 5 y
2020.

Return on Equity shows the profits generated u

Since the ratio has been increasing continously
12.18% 12.22% 12.82% 12.82% in 2020. It shows the management's eff
shareholder's funds and generating higher retur

This shows the proportion of total profits earne

the bank. The higher the ratio the better it is sin
represents efficient management of funds. Incre
0.45 0.44 0.51 may represent investments generating higher re
of lending. It has increased from .45 in 2016 to
sign for the bank.

This shows returns generated from investments

the company. A ratio of 3.81% indicates that r
4.05% 4.06% 3.81%
interest income which is a very healthy sign of
 Equity Multiplier shows the assets financed usi
capital structure. The lower the ratio the better
multiplier indicates that the bank is using a high
6.69 6.78 6.60 assets. Since this leverage is on a declining tren
2020. It is a good sign for Kotak bank.

As per the above break-up of ROE, increasing i

contributing the most to the increasing ROE wh
12.18% 12.22% 12.82%
kotak bank as the mainstream business of lendi

This shows the net interest income earned by u

bank. An increasing ratio from 3.85% in 2016 t
3.75% 3.73% 3.97%
of near to optimum utilization of assets.

This shows the non-interest income over operat

which form a major portion of the cost structur
throughout the five years from -1.36% in 2016
-0.73% -0.79% -0.81% to as burden on the bank.Though a declining ra
either operating expenes has reduced or non-int

This shows the provisions created over total ass

against loan turning bad, provision for tax and
1.20% 1.14% 1.21% likely to come in the near future based on some
bank.

As per above break-up, Net interest income is t

to return on assets from 1.42% in 206 to 1.94%
1.82% 1.80% 1.94%

This shows the net interest earned by utilising t

includes balances with other banks, RBI, call m
3.94% 3.90% 4.13% advances of the bank. The higher the ratio the b
stable but stagnant over the past 5 years from 4
2020.
This shows assets which generate income for th
assets of the bank which is a very health sign fo
95.16% 95.71% 95.93% amount of liquid assets.

This shows the net interest income earned by u

bank. An increasing ratio from 3.85% in 2016 t
3.75% 3.73% 3.97% of optimum utilization of assets. Though the ra
the past 5 years.

As explained above in Row 66

3.75% 3.73% 3.97%

This shows the earning capacity of assets advan

customers including banks. The higher the ratio
7.82% 7.91% 7.87% efficient utilistation of bank's funds. It has decl
7.87% in 2020 which is not a good-sign for the
 This shows interest to be paid on the deposits m
the bank including term and demand deposits. I
4.58% 4.77% 4.45% 2016 to 4.45% in 2020 which is a good sign for
deposit base has increased more as compared to
to reduced deposit rates.

I shows the deposts to Loan ratio. The higher th

every Rs.100 total loan provided by bank to th
84.72% 84.26% 84.08% Rs85 deposits with it. A declining ratio indicate
which may jeopardise the financial health if loa

Spread measures the interest income earned on

interest paid to depositors of the bank. The high
3.24% 3.15% 3.43% As per above break-up the decline in interest ex
increase in the spread margin from 3.29% in 20

This shows operating expenses of the bank ove

The lower the ratio the better it is. The ratio has
61.35% 62.26% 59.44%
2016 t 59.44% in 2020 which is a good sign for

Credit risk is the risk of non-payment of a loan

provisioning has to be maintained to safeguard
0.21% 0.25% 0.38% calculated as provisions for NPA over total asse
34% in 2016 to .38% in 2020.

This shows equity capital of bank over its risk w

ratio of Kotak has increased from 13.85% in 20
14.95% 14.75% 15.15%
positive sign for the financial health of the bank

This shows total capital of bank over its risk we

capital adequacy norms under Basel requiremen
16.14% 15.89% 16.36% capital has to be maintained over its total assets
increased from 14.93% in 2016 to 16.36% in 20
the financial health of the bank
This shows provisions created for bad loans ov
customers excluding RBI. This is a safeguard m
2.05% 1.94% 2.24% erosion of capital in case of actual instances of
from 1.87% in 2016 to 2.24% in 2020.

This shows debt to total assets of the bank. The

It has declined from 60.13% in 2016 to 56.38%
61.00% 61.61% 56.38% for the company as it shows reduced dependenc
capital structure.

38,253,800 44,679,400 50,268,900

 This shows percentage of gross NPAs over tota
bank. The lower the ratio the better it is. It has
1.86% 1.84% 2.01% to 2.01% in 2020 indicating rising amount of b
asset quality is turning bad as compared to the

29,298,000 31,594,000 38,776,000

This shows the part of burden cost incurred by

smoothly. It has declined from 14.95% in 2016
11.20% 10.12% 11.82% good sign for the company as it indicates salari
compared to other operating expenes like rent,

29,467,742 34,314,608 28,662,809

91,582,236 105,757,162 114,218,010

This shows the percentage of taxes paid out of

calculated after taking into consideration the re
32% 32% 25% assessment year so that it reflects actual outflow
The ratio has declined from 34% in 2016 to 25%
government amendments to reduce corporate ta

. for the period 01.04.2016 to 31.03.2020

pta PGFC1923

of Financial Ratios (Row 49 to Row 93)

Short description of Particulars

Safest Assets Class

Relatively risky than RBI but safer than other assets
class
Subject to interest rate risk otherwise safe assets

Subject to fluctuations in forex otherwise safe

Carries default risk, interest risk

Most risky assets class carries default risk, liquidity
risk, interest risk

Bank pays lower interest rate on these deposits

Bank pays no interest on these deposits (Current A/c)

Bank pays agreed amount of interest depending upon
the duration of deposits, carries highest interest rate
Bank's borrowings in the capital structure, pays agreed
interest i.e. cost of raising funds
Insurance policy liabilities, insurance reserves, no
interest payable

Equity share capital of shareholders

Part of equity to be allottted to the employees of bank

Accumulated profits of the bank

Interest received on loans and advances granted

 Interest payable on deposits

Income from investments like mutual funds

Salary expense, rent, electricity and other operating
expense
mount set aside to meet any contigent liability in the future

Amount set aside to set-off bad debts

Net Income generated during each financial year

nalysis of Financial Ratios MY OUTLOOK

ity of management to generate return by utilisation of
advances of the bank. This has been increasing
42% in 2016 to 1.94% in 2020 indicacting efficiency of
mum utilisation of banks funds to generate after tax POSITIVE

ows the assets financed using equity portion of the

e lower the ratio the better it is. As a high equity
hat the bank is using a high amount of debt to finance
erage is on a declining trend from 7.22 in 2016 to .60 in POSITIVE
gn for Kotak bank.

earning assets as well as fixed assets are majorly

wings and deposits from the customers. A higher ratio is
ed stagnant for the past 5 years from .14 in 2016 to .15 in NEUTRAL

ows the profits generated using the shareholder's funds.

een increasing continously from 10.28% in 2016 to
hows the management's efficiency in utilisation of POSITIVE
and generating higher returns.

ortion of total profits earned to non-interest income of

the ratio the better it is since increasing interest income
management of funds. Incresing Non-operating income
ments generating higher returns than normal operations POSITIVE
reased from .45 in 2016 to .51 in 2020 which is a good

enerated from investments with respect to total assets of

o of 3.81% indicates that rest 96% of the income is
NEUTRAL
ch is a very healthy sign of a bank.
ows the assets financed using equity portion of the
e lower the ratio the better it is. As a high equity
hat the bank is using a high amount of debt to finance
erage is on a declining trend from 7.22 in 2016 to .60 in POSITIVE
gn for Kotak bank.

ak-up of ROE, increasing income from earning assets is

t to the increasing ROE which is a positive sign for the
POSITIVE
ainstream business of lending is performing well.

nterest income earned by utilising the total assets of the

ratio from 3.85% in 2016 to 3.97% in 2020 is indicative
NEUTRAL
utilization of assets.

interest income over operating expense like salaries

portion of the cost structure. Since the ratio is negative
years from -1.36% in 2016 to -.81% in 2020, it is reffered
bank.Though a declining ratio is better as it indicates POSITIVE
enes has reduced or non-interest income has increased.

isions created over total assets for covering losses

bad, provision for tax and other contigencies which may
near future based on some exisitng agreement of the NEUTRAL

up, Net interest income is the major contributing factor

om 1.42% in 206 to 1.94% in 2020.
POSITIVE

nterest earned by utilising the earning assets which

th other banks, RBI, call money market and loans and
k. The higher the ratio the better it is. It has remained NEUTRAL
ver the past 5 years from 4.09% in 2016 to 4.13% in

hich generate income for the bank forms 95% of the total
hich is a very health sign for a bank as it indicates large
ets. POSITIVE

nterest income earned by utilising the total assets of the

ratio from 3.85% in 2016 to 3.97% in 2020 is indicative
on of assets. Though the ratio has remained stsgnant for NEUTRAL

in Row 66
NEUTRAL

ng capacity of assets advanced as loans to various

banks. The higher the ratio the better it is. It indicates
of bank's funds. It has declined from 9% in 2016 to NEUTRAL
h is not a good-sign for the company.
 o be paid on the deposits made by the customers with
erm and demand deposits. It has declined from 5.71% in
20 which is a good sign for the bank as it indicates the POSITIVE
eased more as compared to the interest payable on it due
ates.

to Loan ratio. The higher the ratio the better it is. For
oan provided by bank to the customers, the bank has
t. A declining ratio indicates exuberance in making loans NEUTRAL
se the financial health if loans start turning bad.

interest income earned on loans and advances over net

sitors of the bank. The higher the margin the better it is.
up the decline in interest expense of the bank has led to NEUTRAL
d margin from 3.29% in 2016 to 3.43% in 2020.

g expenses of the bank over net total income of the bank.

he better it is. The ratio has declined from 64.43% in
POSITIVE
20 which is a good sign for the company.

k of non-payment of a loan by the borrower. An adequate

be maintained to safeguard against such losses. This is
ons for NPA over total assets. It has increased from . NEUTRAL
% in 2020.

apital of bank over its risk weighted assets. Since the

creased from 13.85% in 2016 to 15.15% in 2020, it is a
POSITIVE
financial health of the bank.

ital of bank over its risk weighted assets. This is a part of

ms under Basel requirements where a minimum of 9%
ntained over its total assets. Since the ratio of Kotak has POSITIVE
3% in 2016 to 16.36% in 2020, it is a positive sign for
of the bank
ns created for bad loans over total loans provided to the
RBI. This is a safeguard measure by banks to prevent
case of actual instances of bad debts. It has increased NEUTRAL
to 2.24% in 2020.

otal assets of the bank. The lower the ratio the better it is.
60.13% in 2016 to 56.38% in 2020which is a good sign
t shows reduced dependence on debt for financing its POSITIVE
ge of gross NPAs over total loans and advances of the
ratio the better it is. It has increased from 1.96% in 2016
dicating rising amount of bad loans. It also indicates the NEUTRAL
ng bad as compared to the previous years.

of burden cost incurred by banks to run the operations

lined from 14.95% in 2016 to 11.82% in 2020 which is a
mpany as it indicates salaries have not increased much as POSITIVE
perating expenes like rent, electricity etc.

entage of taxes paid out of total taxable income. This is

ng into consideration the refund for the respective
hat it reflects actual outflow of cash in form of taxes. POSITIVE
ed from 34% in 2016 to 25% in 2020 reflecting
ments to reduce corporate taxation.