INSUBCONTINENT EXCLUSIVE:
valuation premium of Kotak Mahindra Bank to peer banks is significantly above the five-year average, which is likely to narrow in the next
plagued by coronavirus-related concerns since February
Shares of Kotak Mahindra Bank have fallen 26 per cent while Bank Nifty has declined 37 per cent during this period.
On Monday, the Kotak
premium to large private sector banks
Gross non-performing assets for the quarter stood at 2.46 per cent, higher than 2.32 per cent in the September quarter and 2.07 per cent in
the December quarter of the previous year.
UBS said Kotak has navigated around troubled sectors in the past, and on a relative basis its
asset quality risk looks lower than peers.
The brokerage flagged unexpected credit risk due to the broader slowdown
Kotak has exposure to vulnerable sectors such as autos and unsecured personal loans, including small business loans, at around 24 per cent
of total loans, as well as small and medium enterprises, said UBS.
The brokerage expects credit costs of the bank for the financial year
ended March and the ongoing financial year to rise 1.25-1.5 per cent, which would still be lower than after global financial crisis levels
