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Kotak Mahindra plans maiden overseas branch in Singapore

Kotak Mahindra plans maiden overseas branch in Singapore
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First Published: Mon, Jun 20 2011. 05 23 PM IST
Updated: Mon, Jun 20 2011. 05 23 PM IST
New Delhi: India’s Kotak Mahindra Bank plans to open its maiden overseas branch in Singapore and has applied for a licence to the Indian central bank, a senior official said on Monday, as it looks to tap the overseas banking requirements of Indian firms.
“We have applied for an international branch to the RBI (Reserve Bank of India). We would like to set up our first branch in Singapore,” C. Jayaram, executive director of Kotak Mahindra Bank told Reuters, but declined to give a time frame.
After the bank obtains the RBI nod, it will have to get an approval from the Monetary Authority of Singapore, he said.
Indian banks have been expanding in overseas markets to tap into the growing need for financing by Indian corporates as well as to offer a wide range of banking services to non-resident Indians.
Kotak Mahindra’s bigger rival ICICI Bank , India’s No. 2 lender, said in March last year its Singapore branch had received approval from the regulator to launch full banking services in the city state.
Local reach
Kotak Mahindra is also planning to expand its branch network in India and the bank will have more than 500 branches by April 2013, compared with 321 branches as on 31 March, Jayaram said.
“We have a branch expansion plan, for which I think we are in the last stage of getting permission from the Reserve Bank of India,” he said.
Kotak Mahindra is on track to achieve its credit growth target of about 30 percent for the current fiscal year to March 2012 despite high interest rates, he said, helped by its smaller base and as it expands network to tap new clients.
“We had given guidance close to 30% (growth in credit). We have, at this point of time, nothing to change,” said Jayaram.
India’s central bank had forecast in May credit would grow 19% and deposits by 17% in 2011-12.
However, loan growth has remained almost flat so far in the current financial year, reflecting signs of moderation in the overall growth outlook. Bank loans grew a mere 1.1% since March end, while deposit accretion remained robust at 3.3%.
India’s central bank raised interest rates last Thursday for the 10th time since March 2010 and said it will persist in its battle against stubbornly high inflation, downplaying worries about slowing growth in Asia’s third-largest economy.
The private lender, which is looking to grow its business from the corporate sector, expects some softness in net interest margins (NIM), a key gauge of profitability, in this fiscal.
“We are growing corporates faster than the regular book, which would in effect mean that you take some pressure on the margin,” Jaimin Bhatt, group chief financial officer at Kotak Mahindra said, separately.
“We had a NIM last year of 5.6%. We would expect that to soften,” he said, but declined to give a forecast.
The corporate sector accounted for slightly less than 30% of the bank’s total advances at March end. The bank expects it to grow to a third of its loan book, Bhatt said.
Shares in Kotak Mahindra, which the market values at about $7 billion, ended 1.5% lower at Rs 433.25 on Monday in the Mumbai market that fell 2%. The stock is down 4.5% this year
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First Published: Mon, Jun 20 2011. 05 23 PM IST