Kotak Bank: In the case of Vaswani’s appointment, the Street was expecting the only two contenders for the bank’s CEO post were Kotak Mahindra Bank’s two existing Executive Directors.
Kotak Mahindra Bank Ltd reported an in-line September quarter results, with a 24 per cent growth in profit on a 23.5 per cent rise in net interest income. Analysts said a soft net interest magtin (NIM) was already in the price but the appointment of a new external MD & CEO Ashok Vaswani and a likely acquisition of IDBI Bank could serve as overhangs in the near term.
In the case of Vaswani’s appointment, the Street was earlier expecting the two contenders for the bank’s CEO post were Kotak Mahindra Bank’s existing Executive Directors. “So far, Kotak has been run largely by a core team headed by a promoter-CEO that has not changed since inception. While the new CEO brings with him rich experience in digital and consumer banking, going by the experiences at other banks, we believe it would take the new CEO at least 18–24 months to implement his perspectives. So his appointment would likely be a near-term overhang on the stock,” Nuvama said in a note.
Shares of Kotak Mahindra Bank underperformed Nifty Bank by 4 per cent year-to-date. Nuvama sees the likely acquisition of IDBI Bank, which Kotak has not denied, as an overhang, given the vast difference between private and PSU cultures.
Motilal Oswal Securities said Kotak Mahindra Bank delivered a mixed quarter, with a beat in earnings and a 35 bps sequential contraction in NIM. The earnings, the domestic brokerage said, was driven by higher other income and controlled opex. Asset quality improved slightly, aided by healthy recoveries, even as slippages increased sequentially.