 "Kotak Bank acquires StanChart's Rs 3,330 crore personal loan portfolio")
Kotak Mahindra Bank (KMB) on Thursday concluded a deal to purchase a personal loan portfolio of Rs 3,330 crore from Standard Chartered Bank, less than Rs 4,100 crore indicated at time of deal announcement in October 2024 as many customers paid-off loans in between.
The personal loans are part of unsecured retail advances. The unsecured retail loans including retail microcredit had 10.5 per cent share in net advances of KMB at end of December 2024.
Ambuj Chandna, Head Products, Consumer Bank, Kotak Mahindra Bank said the bank had a very controlled exposure in this segment. It will continue to invest in this product. There was room to grow a personal loan book in a systematic and prudent manner. The pool acquisition gives access to target profile (middle and high end of salaried persons).
On the difference between the size of loan pool acquired and earlier announced value, he said there are EMI loans, which had particular value at that time. The transaction did take some time. The pay-offs happen every month in the loan pool. This is a normal run-off and hence amounts are different.
After having received the necessary regulatory approvals and on fulfillment of the relevant conditions precedent, the bank on Thursday (January 23, 2025), completed the acquisition, the lender said in filing with BSE.
While core strategy is to grow the book organically, any in-organic opportunity is a function of transaction which makes sense from a risk-adjusted return basis, Chandna said.
Bank in its analyst call after Q3FY25 results had said that “personal loan trends have actually improved. The stress in the credit card portfolio is now plateauing and therefore hopefully in the next couple of quarters we will actually see a decline. But, it continues to be very watchful on the microfinance portfolio”.
Disclosure: Entities controlled by the Kotak family have a significant holding in Business Standard Pvt Ltd.