MESSAGE FROM UDAY KOTAK
When everything can change
ANYTHING IS POSSIBLE
The word that has resonated the most with me especially post-COVID is humility.Whether it is political leaders central bankers business leaders or the householderchange is on us and at us - like we have never seen before and none of us can pretend weknow its contours and how things will play out.
With the COVID era hopefully behind us the world feels like a different place. Whetherit's war inflation supply shortages deteriorating service standards everywhere or crazyairline travel prices something seems to have snapped. We are on a road never travelled.
The geopolitical order is also at the altar of change.
But I am also convinced that this is where new vistas of opportunity are as wereshape our planet.
THE GLOBAL MARKETS BECOME THE FIRST INDICATORS OF CHANGE
In the past few years much private capital supported by liberal printing of money bycentral banks has chased a host of new-age companies with an intent to create valuethrough access affordability efficiency and usually an asset-light model hinged ontechnology. The valuations have been off the charts with investors chasing unicornsgazelles and anything that can resemble a disruptor of traditional business models.
Like every rise in history this one also came to a fall a meltdown to be moreprecise with trillions of dollars of investor wealth eroding globally at speed. We movedfrom a world where money had zero price to money does come at a price! From here where dowe goRs
THE INDIAN ECONOMY PERFORMED RESILIENTLY AMIDST THE CHAOS
The delta wave enveloped Q1 perhaps also driving an unprecedented scale of vaccinationacross the nation. By Q2 though the economy had begun to revive at speed. The scale offestive spending travel and tourism job creation and GDP growth touched prepandemiclevels signaling the robustness of a large domestic economy fueled by a captivepopulation riding on deferred spending and aspirations. By Q4 digital payments crossedthe USD1 trillion mark and the stock markets rose to an all-time high riding on a newbreed of part-time retail investors. Real estate one of the most preferred asset classesfor Indians saw a revival on the back of demand for premium housing and bigger units.Lower interest rates coupled with large unsold inventory were like manna from heaven forhomebuyers.
The Government's pledge to promote ease of business and faster implementation of largeprojects kept India a decent performer amidst tough global conditions. The efforts made inthe past few years started connecting to build an ecosystem led by technology access andaffordability in the rural and urban markets.
Amidst this resurgence the global economic impact began weighing in fuel pricesboosting inflation and curtailing access to easy money affecting spending and investmentsin some segments of corporate India. The ripple effect of lockdowns in China createdsupply chain challenges deferred supplies and chip shortages the full impact of whichwill take time to register. However this disruption has indeed brought the need toexplore India as a key alternate procurement destination for many sectors worldwide. Thisopportunity clearly ties in with the ambitious 'Make in India' vision of the Hon'ble PrimeMinister Shri Narendra Modi.
IT IS TIME TO TAKE WING BUT WITH PARACHUTES ON
India continues to have a fundamentally sound growth story. The core of any strategylies in its execution and while taking an unpaved road one needs to balance enthusiasmwith a sense of alertness. Given the fluidity of the global economy geopoliticallandscape and inflation the immediate few months ahead may pose multiple challenges.
India will need to balance its aspiration for growth with maintaining macro-economicstability. India cannot choose its neighbourhood which adds to the challenges at hand.Prudence on the fiscal deficit current account and monetary policy are key requirements.
"The word that has resonated the most with me especially post- COVID ishumility. Whether it is political leaders central bankers business leaders or thehouseholder change is on us and at us - like we have never seen before and none of uscan pretend we know its contours and how things will play out."
AT KOTAK OUR STRATEGY IS ALIGNED TO THE POSSIBILITIES UNFOLDING
We at Kotak envisage the future around excellence relevance and sustainability.
Excellence is all about delivering cutting edge products and customer experience. Ourinvestments in people and technology have enabled us to accelerate in a dynamic marketspace.
Relevance is all about creating a significant and meaningful presence in our chosencustomer product and geographical segments. We have continued to foray and scale up ourpresence in key growth segments.
While many companies have meteoric growth few sustain in the long run. This brings meto the final pillar sustainability. It is all about insulating the business as well ascreating value while investing in risk management processes and brand and ESGconsciousness.
"We at Kotak envisage the future around excellence relevance andsustainability."
CHANGE IS A CONSTANT AS WELL AS AN OPPORTUNITY
In the past few years we have reimagined banking outlining customised platforms toempowering diverse customer profiles through technology comprehensive need analysis andon-demand delivery from branches to fingertips. We have built a robust business modeleyeing the challenges. Being a conservative institution by nature helped us build moatsaround credit products technology reliance and pan-India presence. And we have continuedto overhaul them never taking anything for granted.
Being optimistic through actions helped us set new directions to the Kotak growthstory. We try to predict and adapt to change. In FY 2021-22 we rebranded Kotak811 tooffer the essentials of banking through a tech-first user experience to millions ofIndians. Kotak811 is changing the way India banks every day offering a gateway to a richecosystem of Kotak financial products to aspirants and achievers alike.
As a Group with innovation at its core we launched our ambitious investment app KotakCherry. It is our endeavour to offer DIY investing across all asset classes and make itaccessible to all investor types. The major change at Kotak is the new courage toexperiment and learn. We are fervently working on innovative changes across the groupincluding in securities asset management and alternate assets.
"In FY 2021-22 we rebranded Kotak811 to offer the essentials of banking through atech-first user experience to millions of Indians. Kotak811 is changing the way Indiabanks every day offering a gateway to a rich ecosystem of Kotak financial products toaspirants and achievers alike."
OUR PERFORMANCE HAS BACKED OUR EFFORTS
In FY 2021-22 our net profit at the consolidated level witnessed a 21% YoY growth toRs 12089 crore. Our consolidated net interest margin was 4.7% (up 20 bps against FY2020-21). The Return on Assets (ROA) at the consolidated level was 2.36% for FY 2021-22(2.16% for FY 2020-21). Our Bank's Standalone CASA stood at 60.7% capital adequacy ratio(CAR) at 22.7% with CET1 at 21.5%.
As of 31st March 2022 the total assets under management (AuM) for KotakGroup was more than Rs 382500 crore. As a responsible homegrown ecosystem we cater tothe diversified financial needs of our customers in addition to banking and financing beit mutual funds insurance (life and general) investment banking institutional andretail broking services investment advisory alternate assets et al.
WE CONTINUE TO PUSH BOUNDARIES
When it comes to making an impact actions matter.
At Kotak we have ensured that our businesses are compliant and socially responsible. Wehave built a culture of identifying areas of improvement and are leading the change.During FY 2021-22 we focused on women representation and ESG efforts. During the yearthe growth in our group's workforce improved women's representation to 28%. We doubleddown on our pandemic relief efforts assisting both employees and communities. Weinstituted an ESG policy framework undertook a materiality assessment and initiated aclimate risk and opportunity assessment. We have also begun to bring our Indiansubsidiaries into the fold of monitoring emissions generated paving the way for us tostreamline our ESG strategy. In this Report we are addressing the enhanced disclosurerequirements regarding ESG parameters through the 'Business Responsibility andSustainability Report'. Our efforts shall continue to see more promising results goingforward.
"As a responsible homegrown ecosystem we cater to the diversified financialneeds of our customers in addition to banking and financing"
"In this Report we are addressing the enhanced disclosure requirements regardingESG parameters through the 'Business Responsibility and Sustainability Report'. Ourefforts shall continue to see more promising results going forward."
THE JOURNEY HAS JUST BEGUN
To paraphrase Steve Jobs the future unfolds every passing moment and one can onlymake sense of it in hindsight meanwhile trusting that the dots will eventually connect.Much like navigating an uncharted terrain - with no precedents or map or guide. That'swhere possibilities lie in abundance.
Change is the new comfortable feeling. Let's make anything possible withhumility at the core!
July 14 2022