This revives speculation regarding one of the longest-pending deals in Indian banking. Kotak has consistently been considered a serious contender for IDBI, and Vaswani’s openness to discussions indicates that their strategic interest remains strong.
He did not provide additional details, noting that inorganic growth is primarily a long-term strategy for Kotak.
Vaswani highlighted the West Asia conflict as a more immediate concern, casting an unexpected shadow over what was anticipated to be a robust start to FY27.
Corporate India was in good shape as it entered the new fiscal year, buoyed by government capital expenditure contributing to broad-based growth momentum, but he noted that this momentum has now faced interruptions.
Also Read: Kotak Mahindra Bank Q4 Result: Net profit rises 13% YoY; Asset quality improves, dividend announced
He anticipates a return to normalcy once conditions stabilize, but admitted that defining specific growth targets at this moment would be challenging.
“Every day presents a new scenario,” he stated. “We are keeping all possibilities open and hope this won’t be a long-term scenario.”
The most noticeable impact of the conflict is on smaller borrowers, particularly those with trade connections to the region who are under significant pressure, he explained.
Nevertheless, Vaswani emphasized that the bank currently sees no need for extra provisioning, citing a capital adequacy of 22% as a sufficient buffer.
Regarding asset quality, the outlook from Q4 appeared positive. Vaswani mentioned that the worst of the credit cycle seems to be behind them, with gross NPA improving to 1.20% for the quarter. The merger integration of Sonata-BSS is producing results, with evident active destressing in the microfinance portfolio, he added.
As FY27 begins, Kotak is prioritizing microfinance and credit cards as key growth segments and aims to restore its unsecured retail book, which currently stands at 8.9% of advances, back to pre-COVID levels.
On margins, he noted that NIM compression is expected through FY27 as the deposit market tightens and rate cuts impact the system. He further mentioned that the bank is not aiming to significantly reduce its credit-to-deposit ratio, preferring instead to grow deposits and assets in tandem rather than pursuing either in isolation.
