The hikes in marginal cost based loan rates will improve the yields for the bank and hence would positively impact its net interest margins.
Kotak Mahindra Bank (KMB) has raised its marginal cost of funds based lending rates by 5-15bps across tenures for January, effective today, information on the lender's website showed. The bank's revised marginal cost based loan rates will now be in the range of 7.80-8.70%. The hikes in marginal cost based loan rates will improve the yields for the bank, and hence, would positively impact its net interest margins.The Reserve Bank of India has asked banks to update their lending rates based on the marginal cost of funds on a monthly basis.
KMB undertook a slew of new initiatives over the past 12-18 months. These include sharper focus on digital banking. Further, decline in funding cost and sustained improvement in operating efficiency are likely to present an upside to KMB’s earnings. We forecast 25% EPS CAGR and modest increase in ROE over FY18-20E. The stock is trading at 2.6x FY20E P/BV. We have positive outlook on the stock.
Kotak Mahindra Bank Ltd is currently trading at Rs1,008.75, up by Rs4.75 or 0.47% from its previous closing of Rs1,004 on the BSE.
The scrip opened at Rs1,003 and has touched a high and low of Rs1,014.35 and Rs1,003 respectively.
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