download-pdfAnnual Report 2019-20

The calm waters after a storm often reveal new land and wealth. The best navigators use their compass, expertise and knowledge to remain on course and sail faster towards these new opportunities. Their courage leads them to a richer future.

Kotak has always believed that challenges and changes result in opportunities for the organisation. Its approach, attitude and ability to take the right decisions at the right time help it to convert each challenge into a growth opportunity.

The Asian financial crisis, the global financial crisis of 2008 and the taper tantrum that followed have all jolted the financial services industry, but they have also shown Kotak new ways to build shareholder prosperity and value. These crises have proven to us that there are always opportunities beyond a storm.

How Kotak emerged stronger from past crises

1997 Asian non-banking financial companies' crisis:

Of more than 4,000 NBFCs that entered the crisis, less than 100 survived. Kotak, at that time an NBFC, focussed on strong capital reserves and prudent risk management. Once safe, it applied to the RBI for a banking licence, and began a new phase of growth in 2003.

2008 global financial meltdown and its aftermath:

Following the global financial crisis caused by the 2008 collapse of Lehman Brothers in the United States, the RBI in 2011 deregulated savings account interest rates in India.


Kotak, having protected itself through the crisis, saw an opportunity to grow, and took the bold move of offering a rate up to 6% to its savings account customers. The Bank backed this decision with 9 years of conviction, during which its savings deposits have grown from ₹3,330 crore as on 31st March, 2011 to over ₹1 lakh crore as on 31st March, 2020.

Growing franchise in non-credit risk areas

While Kotak takes a cautious approach on lending, its other franchise businesses - the brokerage, mutual fund, investment bank, wealth management and insurance - continue to thrive. These are relatively low-risk businesses, have provided the Group with a stable, growing source of revenue, and are well-positioned to continue delivering through the crisis and beyond.

An eye on the future

Kotak has undertaken several initiatives to succeed in the future. It continues to have a relentless focus on risk-adjusted returns - core to its business philosophy - and its standalone Net Interest Margin (NIM) increased from 4.31% in FY 2018-19 to 4.62% this year. In the month of May 2020, it concluded a capital raising process, issuing 650 million new shares to institutional investors, and raising over ₹7,400 crore. The increased capital will further strengthen its position, while also allowing it to confidently explore growth opportunities as they come.

Finally, it continues to put in place several efficiency improvements and cost reduction measures to improve business metrics. All of these measures, and many more, should hold Kotak steady through the storm and into the future, delivering shareholder value for years to come.