Thank you very much. We will now begin with the question -and-answer session. Your first question comes from the line of Piran Engineer with CLSA. Please go ahead.

Yeah, hi team. Congrats on the quarter and thanks for taking my question. Just firstly, can you talk a bit about trends in the CV segment, more importantly in terms of collections and what are you waiting for, you know, in this space to kickstart growth again?

Hi. This is Paritosh. See, in the CV segment we have been consistently seeing improvement in our collections. As I'd mentioned during my commentary that Q1 is little slower compared to Q4, so the growth has been muted, but we expect that with the right selection between different segments, we should look at it going forward.

Can we hit like 10%, 12% growth this year at least in this segment Y-o-Y?

We don't we don't really give a forward guidance on the growth, but I would say, we will maintain the market share.

Understood. And just sorry, if I may follow up on your point. When you're saying you see improvement in collections, is it at a level where it used to be one and a half years back or is it still above steady state levels? As in are slippages still above steady state levels?

I would say -- our slippages are reducing and we've been maintaining the pace of improvement Q-o-Q.

Understood. Okay. Thanks. Secondly on personal loans, again here the book was flattish Q-o-Q and this is when we called out two quarters back that, you know, personal loans is now fine. So how do we really read into this?

Hi, Piran, this is Anup here. When you look at the personal loan, that comprises of personal loan, unsecured business loan, and consumer durable all in together. On the personal loan side, last year we had a Standard Chartered portfolio bought in, so that is of course is running down faster. If you net that, the growth on the organic personal loan growth is quite strong now, that is the first. On the unsecured business loan, this quarter we have been little more cautious because of whatever issues we are seeing on the SME side because of, you know, three months back things were looking very bad. But at aggregate level, we have started growing on a PL. You'd start seeing numbers improving from here because the organic growth is now on double digit plus. So that's my point.

Organic loan book growth is double digit plus.

Yes, on the PL side and consumer durable obviously is a business we now don't focus on.

Yes, so couple of reasons for that. One is there is an MFI clean up and two also, you know, some amount of dormant and inactive customers, which we are just kind of closing out. And in fact, that's a protective measure to make sure we don't get into that mules kind of problem. So, it's more about a clean-up of the book.

Understood. Okay. Yeah, that's it from my end. Thanks, and wish you all the best.

Thank you very much. Thank you. Your next question comes from the line of Kunal Shah with Citigroup. Please go ahead.

Kunal, how are you?

Yeah, all good. Hi. So, Sir, particularly on the deposits side, so across the board if we just compare amongst the private banks, there has been the step -up on the deposit s growth, be it on end of period as well as the average deposit s growth has been quite strong across the board. For us, maybe we had seen some moderation out there. So maybe what would be the strategy? We highlighted, we touched upon a lot in terms of the different initiatives on the deposits side, but it appears that amongst the top four banks, in fact, we still seem to be relatively lower in terms of the growth. So how do we tend to address that both on the average as well as EOP? And on that basis, maybe what is the LCR for the quarter? It appears maybe we would have seen some decline in the LCR.

Kunal, hi, Anup here. On the deposit s strategy for us continue to remain multi -prong driven through four focus segments which we spoke about and it continues to yield result. As a Bank, we place greater emphasis on average balances rather than end of period balances. Overall average deposits grew 13.6% Y-o-Y, while average term deposits grew at 14% Y -o-Y. Our average CA balances grew 15.2% Y -o-Y. Trade and transaction balances continue to witness good traction, during Q1FY27. However, this quarter growth in CA was impacted due to moderation in capital market activity, which resulted in lower deal flow related balances. Moving specifically to SA, average fixed rate SA balances grew 16.4% Y -o-Y, again very granular, reflecting strength of our focus customer segment strategy as seen in our granular low -cost deposits mobilization. As I already spoke about the 811 SA, who grew 32% Y-o-Y, again fully granular, which now accounts for 12.7% of total SA. Similarly, we continue to see good traction on the HNI and Solitaire segment. However, this quarter we saw some moderation in balances primarily driven by flow movement from private banking segment of reallocation of funds from savings to investments. So to that extent, these are one-off, but we continue to remain focused on granular, focused on average rather than EOP. That too continue to remain our strategy because that flows into straight away to optimize the cost of fund rather than a template number of EOP.

And Kunal, like last time you checked, you kind of asked the question on increase in deposit s rates in longer tenor buckets and will that have impact on our cost of funds. You can see that our cost of funds has only gone up by one basis points and it has had no such impact exactly as we had mentioned.

Yeah, no, so that's commendable that margins are sustained. Yeah, so that's good enough compared to the guidance which was there in the last call or maybe that trend. So that's good enough. And secondly, when we look at it now, credit cost even in, say sea sonally slower quarter, we had seen it settling much at a lower level. So now being

comfortable on the asset quality on the delinquency trend, would we look at stepping up on the advance growth as well? We have seen some uptick in say Corporate, SME, some of the unsecured segment, MFI and all, but all around when we look at it, it's been still like 15% -16% odd for quite a while, while we had seen like other banks stepping it up beyond the industry average. So when do we see that because there is a lot of comfort on asset quality?

So Kunal, I think you should look at it in multiple kind of perspectives, right? The first thing, yes, we are very comfortable with where we are from a credit perspective, right? A lot of the hard work over the last two years to clean up the credit cards portfolio, PL portfolio is now behind us. We are very comfortable, it's within our guardrails, it's all working quite well. Okay. Like we said, unsecured we will continue to grow in rupee terms, we continue to kind of do that. As Anup mentioned, business loans we were a little cautious this quarter because of all the stuff that's happening because of the supply chain disruption and impacts of that. We will continue to grow where we get opportunities. And think about growth, don't think about growth only in one quarter, right? Think about growth over a certain period of time. Both organic growth and inorganic growth, and between organic growth and inorganic growth, we will deliver over the system, nicely over the system kind of growth rates on advances, both secured and unsecured.

Okay. So including the inorganic one?

Yes, including inorganic.

Okay, okay. Got it. Yeah, thanks. That answers the question and all the best. Yeah.

Thank you.

Thank you. The next question comes from the line of Ankit Bihani with Nomura. Please go ahead.

Hi, Ankit.

Yeah, hi, thank you for taking my question. So my question is first on margin. So if we look at the reported margin decline of 14 bps Q -o-Q, so I think last quarter there could be some day count impact. So if you could share if you normalize the day count impact, what would be the decline? And the second question, does our margin commentary now change given that we have seen the wholesale funding rates also come down? So the funding environment is set to improve from here on. So any comment on that?

Hi Ankit, Devang here. So as I had indicated during Q4, the adjusted NIM as against 4.67, if you were to adjust for the day count, it would have been 4.54. And therefore, if you see, in fact, my colleague is reminding me, in fact, since Q2, if you see Q2 w as also 4.54, Q3 which is December quarter was 4.54. If you look at the March quarter, which is equivalent of 4.67 is 4.54, and for this quarter it is also 4.54. So, the margin has remained actually consistent. In terms of the future part, I think there are multiple variables which are governing the outcome of this and which are constantly changing. So we would not like to provide any specific guidance on the NIM going forward.

But this doesn't change your guidance basically which you had provided in Q4. Anything on that? So you did provide some guidance in Q4, right?

So, the guidance was at that point of time. But as you know, after that, so many things have changed, right? In terms of whether FCNR...

One second, Ankit, one second. We didn't provide guidance. We basically said that there's an industry commentary and there was a Kotak specific commentary. And I think some of it got mixed up. We said on an industry basis, on an industry basis, we will see some margin declines. By the way, we were absolutely right for Q4 and Q1. We said as far as Kotak is concerned, because we've got multiple horses in the race on the deposits side and we'll manage the asset side in a nimble fashion, we will be fine. And that's exactly how it's played out in Q4 and Q1. The commentary about margin decline, I repeat, was an industry issue, not a Kotak specific issue.

Okay, that's very clear now. And I missed out on the LCR part. So , what is the average LCR for the quarter for the standalone bank?

So we report the group LCR, which is actually improved from 134 in the Q4 to 143. The reason if you know that, we were of course having significant liquidity at March end itself. And from 1st April, as you know, there are norms on LCR have changed, which has effectively added approximately 9% to 10% incremental LCR. So, while on a n average basis, depending on the advance and deposit s mix, actually it is showing a increase. But I think for the month of June and going forward, it will obviously start utilizing as we efficiently utilize this LCR amount to fund our balance sheet growth.

And on the standalone, last quarter you had highlighted it was 125%. This quarter, any number on that for the standalone bank?

For standalone, I think again the advantage for this increase in this thing came only in the standalone. So , the standalone Q4 average will be around 125.

And -- okay. And 1Q...

Sorry, Q1, sorry, what I meant is Q1.

It's 125?

Yes.

Okay. Thank you.

Thank you. The next question comes from the line of Rikin Shah with IIFL Capital. Please go ahead.

Hi, thanks for the opportunity. Just two questions. The first one, Kotak's loan and deposit s growth is now about 350 and 150 basis points below the system respectively. Despite having excess capital and lower scale, why is there a bit

more unwillingness to accelerate without diluting the ROEs when some larger peers are able to deliver this? So that's the first one. And second question is on Deutsche's portfolio acquisition. Could you talk a bit more about the profitability of the business acquired in terms of ROE etcetera? You did provide all the other details. Just was curious to know the comment on ROE being accretive for Kotak, was it because of the excess capital being put to use or if you could just provide some colors on ROEs as well. That's it? Thank you.

Yes, so look as far as the asset growth is concerned, our focus always has been responsible and profitable growth and not just growth for the sake of growth. So we focus on growth in high ROE kind of businesses and businesses which from a credit perspective are good. And like I said, I don't think you should look at advance growth just for one quarter. Look at it for a longer period of time and between organic and inorganic, we will comfortably drive over system level kind of growth. I think deposits side Anup took you through a lot of detail on how we're thinking about it and how we're driving. We continue to be very, very focused on the four customer segments. It's worked really well for us. It's granular, it's low cost. You can see that we've maintained margins and therefore we are driving both growth on the asset side and on the deposits side in a sensible and a profitable and responsible kind of manner. As far as Deutsche is concerned, I mean these are opportunities that come along. Like I've already maintained, we look at every single inorganic opportunity there is. The first question we ask ourselves does this strategically make sense? Now Deutsche has 150,000 customers, affluent and SME customers. So, two of the customer segment focus areas which we are very, very focused on. So strategically it makes a lot of sense. It's a pretty sizeable transaction, INR 29,000 crore of advances and INR 16,000 crore of deposits, INR 10,500 crore of wealth AUM. So it will add meaningfully to the Kotak kind of transaction. And yes, we definitely believe that the price at which we paid at INR 281 crore, this will be ROE accretive to us. Now the transaction actually closes in September of 2027, so the full contours of the transaction will only be known then. So I'm not going to hazard a guess as to what the ROE will be. And obviously this will , as we grow the balance sheet to this extent, it will consume some of our excess capital.

And also, as you look at the Deutsche portfolio, that goes into our core focus segment s philosophy of Solitaire HNI. That strengthen that franchise, so it's a great fit for us from a customer segment point of view.

150,000 customers.

Customers yes, 150,000 HNI, Solitaire and SME

Just a follow-up clarification on this second one Deutsche, sir, if I may. While of course I understand you can't talk about the transaction ROA down the line, but what was that in FY26 if you could share that? And also had one additional question if I may in terms of the new CEO appointment given your announcement. What should be the next steps and the potential timelines that we should be looking forward to?

So Deutsche, I don't know what ROA they made. It's difficult for us to quote that kind of number. So I don't know that's a point. Plus it's also a function at what price we bought it and as you know we bought it at a pretty attractive price at INR 281 crore. As far as the CEO succession is concerned, it's pretty straightforward, right? It's as per the RBI timeline and the regulatory timeline that has been kind of set down. And the board and the NRC are totally committed to making sure that that gets done within the regulatory timeline.

Riken, hi, Riken, this is Paritosh to just to go back on your point about asset s growth. If you see this quarter we have grown our Corporate assets and SME assets, Corporate and the Credit Substitutes. We found the market gave an opportunity, short-term yields had gone up, so we took advantage and grew our credit substitutes book by 38% Q-o- Q and even the Corporate book also has gone up very significantly. SME we continued with our growth pace. So that's what I want to say that we will look at opportunity and if there is a opportunity, we will capture that.

Fair. Thanks, Paritosh.

And just one correction, I had mentioned the LCR, the LCR for standalone bank in Q1 on an average basis is 134, not 124, my apologies. Thank you.

Thank you. Your next question comes from the line of Pranav Gundlapalle with Bernstein. Please go ahead.

Hey, thank you for taking my question. My question is more on the Core India segment which you highlighted as a key area of focus for you. What percent of your 811 customers would have a credit account or credit relationship with you today? Because you do share the contribution of 811 to SA, so what would be the equivalent on the credit side and how high do you think it can go and what will it take for the Bank to get there?

So look we don't disclose exactly the credit card numbers against 811 segment. Now what we have disclosed in the past is that when we got too aggressive about it about 3 years, 4 years ago, that did not pay very rich dividends. But I think the way you should think about this is that these are customers who are giving us low-cost granular SA deposits. And if we can just add any other product, whether that is a lending product, whether that is an insurance product, whether that is an investment product, whether that's a brokerage kind of product, the profitability and the SA balances go up dramatically. So the focus is not so much as putting a credit card product. In fact, the credit card product is a very complex product and customer education around how a credit card works and stuff like that is not an easy thing. So even when we get to lending products, the initial focus is on personal loans and only after the cu stomer has gone through a bunch of personal loans do we start getting into credit cards. Also, the one thing I must mention for this customer segment, what has worked really well is secured credit cards and that's doing quite well for us.

Understood. No, my question was just broader credit. Just trying to understand like what percent of these customers would be a segment that you are comfortable lending to with a very large base that you have right now. So just trying to understand lendable customer base?

Yeah, as Ashok said we don't disclose that detail. But if you if you think about this two key segment, focus segment s, when you say Solitaire and HNI, you think about it as a value economics and when you think about Core India which is essentially mass affluent, which is the largest part of India as unit economics.

So, in a way, it will have the products which are more digitally given and digitally served, but more smaller lines. And over time, what we are seeing is as their CASA build -up is very granular and very strong, you will start getting an annuity benefit even on credit. We are cautiously growing it because the idea is we want them to go through the credit understanding and responsibly give them credit to grow. But over long period of time, if you start thinking or medium term, this this is superbly accretive. That's how you should think about it.

Understood. Thank you. Thank you very much for taking my question.

Thank you. Our next question comes from Sumit from Goldman. Please go ahead.

Hey, hi team. Hi, Ashok. Congrats on the quarter. Just couple of questions. One is if you can talk about the impact of ECL, both one -time and on a flow basis and how are you thinking about the ECL transition, expected credit loss transition, that's the one-time impact on net worth as well as what should be the increase in credit cost on a steady state basis. The second question is on FCNR (B), how are you thinking about that opportunity, any targets that you have, have you launched the product, any clarity on that will be helpful? Thank you.

Hi Sumit, I will take the ECL question. As I had indicated earlier also, the one -time impact of the ECL transition is less than 2% of our net worth. And on an ongoing basis, we expect the credit cost to go up by about 12 to 15 bps once implemented.

Yeah, Sumit, FCNR (B) is something which we are quite excited about. Clearly there is a lot of customer demand from NRIs. The question that we are really talking about is how much supply we can build up for providing leverage and two, if you get a mix of three and five year money, what do you do about it at this end. So early days yet, we are working through it. I think it's an encouraging start. We should have a much better picture in the next month or so.

Got it. Very clear. Thank you.

Thank you. Your next question comes from Chintan with Autonomous. Please go ahead.

Hi, thank you for taking my question. Can I come on credit substitutes, it's up 38% Q-o-Q, you said you saw opportunities there. Could you tell us typical duration of the product, how do you see kind of the timing of how much it stays on the book? That's question one. And the second question, just a just a follow-up you told us average deposits grew 13%, average TDs grew 14, average CA grew 15, average fixed-rate SA grew 16. I'm just trying to square the circle if the average deposits are 13 and all the components are higher, what was the moving part that we have missed in this bridge? Thank you.

Let me take the question on credit substitutes. So large part of the growth has come from short term. Large part of the corporate bank advances are short dated, and we saw opportunity when commercial papers were providing far higher yield compared to bank loans, and we moved quickly and captured that opportunity. Also, as you would know, on commercial paper when you invest in credit substitutes or CP, CD, NCD, you do not have a PSL cost end of the quarter. So that's further benefit. It doesn't get counted in ANBC for the next year PSL calculation. So, to answer your question specifically, large part of the growth has come from short dated paper.

On your deposits question, I think we had mentioned only about the fixed rate SA, the floating rate SA balance average has gone down by 18%. So that explains your missing point, which is what is reducing.

Slide number nine.

So, if you see slide number nine, it shows floating rate savings account which is reducing by minus 18%.

Thank you. And if I may slip in one more. Just if you can comment on the competitive dynamics in the quarter, have PSU Banks stepped back in any areas in the last quarter or any products where you see less intense competition or more intense competition? That would be helpful. Thank you.

I would not say we've seen less intense competition and in fact, I don't think we should build our strategy, our thinking on a less competitive environment. We actually have to excel and just expect over a period of time competition only to get stronger and better.

Thanks.

Thank you. We request participants to limit to one question each and rejoin the queue for follow-ups.

Your next question comes from Seshadri Sen with Emkay Global Financial Services Limited. Please go ahead.

Hi, thanks for the opportunity. Just a quick question on the personal loan business. In terms of profitability and sourcing, I know you don't break it out in the results, but how is the trend? Is the ROA starting to expand now? And on the sourcing side, what are you seeing more in terms of internal sourcing as the years go by and going forward? And out of that, how much is digital sourcing versus branch-based sourcing?

So hi, Anup here. Personal loan as a product, our focus is significantly internal sourcing because that's most accretive in terms of cost of doing business. A large part of it is either through the digital asset s strategy which I spoke about, the 811 strategy or Kotak app strategy for both the core segments, and a very large part of the business also happens through our branches. In addition to that, I also spoke about, in addition to the personal loan term loan business product, we have also introduced the personal loan overdraft product, which we believe is a very good product for the affluent segment. In terms of the return equation, this is good, but as a business you need to be very very careful about risk there. Our risk numbers are now quite good and tolerable. As long as you maintain the few basic principles there and take out the cost of doing business, being efficient, it remains very accretive. So, grow it at a very value compounded rate, not do it too very fast, not do it too very slow, and keep an eye on risk.

Yes, but my question actually is the trend because say for example credit cards if we see the listed company there, their profitability has been declining structurally for now seven -eight years. So, are you seeing similar trends at a profitability level be cause the headline yields on personal loans are declining as well? I take that you are getting benefit of cost and credit cost, but the headline yields are also declining?

No, it was on personal loans. I gave credit cards as an example, but the question is personal loans ROAs, are they improving, declining?

No, no, I think we continue to maintain, we continue to maintain range bound and as Ashok said, the focus is on responsible and profitable growth and not growth at any cost.

Understood. Thank you so much.

Thank you. Your next question comes from the line of Param Subramanian with Investec. Please go ahead.

Yes, hi, thanks for taking my question. Just one question. Your yield on investments on a calculated basis, it appears to be dropping for the last two -three quarters. So, what exactly is happening there because even in this quarter, I think, the investment book has grown 11%, but the interest on investments has not grown and neither has the MTM and treasury profit is not reflected in that as well.

Investment yield also goes through the number of days concept as the advances as I had explained. So that is -- we need to make adjustment according to them as well. So Q4 will be higher similar to the advances NIM, similarly for the investment as well.

So, it's more a function of the average balances or is the yield really dropping in the investment book?

No, it is the number of days which actually breaks up that basically. Yes, and it basically evens out over the year.

Okay, okay. Maybe I'll take this offline. Yes.

Thank you. Your next question comes from the line of Jai Mundra with ICICI Securities. Please go ahead. Mr. Mundra, your line is unmuted. Please proceed with your question.

Yes, hi, good afternoon, sir, and thanks for the opportunity. Sir, last time, you had shared your outlook for NIM for Bank and maybe for the system, if you can refresh that, that will be very helpful. Thank you.

Yes, so Jai, like we said, last time we talked about the industry and what the NIM we thought was for the industry. By the way, we were completely right, both for Q4 and for Q1. We do not give any guidance as far as Kotak NIM is concerned. Like Devang said, Q2, Q3, sorry, Q3, Q4, Q1 has largely been flat. I mean it's a difference of one basis points or so. And it's very difficult to give guidance particularly with all that's kind of going on.

Okay, sure. And sir, any timeline for you to achieve the mid-teen number of unsecured loan? I mean that has started to grow up in absolute number, the unsecured retail, but how fast or how quickly can you reach to let's say you’re desired 15% or mid-teen number?

Look Jai, you've got to be a little careful of these percentages, right? Because I don't want to hold back secured loan growth just to make a percentage, correct. So, what I try and do is I'm trying to grow it in rupee terms and like we promised, we said personal loans will come first out of the gate, then we'll see growth in microfinance, then we'll see growth in cards.

It's worked out exactly, exactly like we talked about for the last four or five quarters. So, we continue to say that, we will grow in rupee terms, and eventually the percentage will be really a function of both the growth in rupee terms as well as the growth in the secured book. We're not going to hold back secured just to make a percentage.

Okay, sure. Thank you, sir.

Thank you. Ladies and gentlemen, in the interest of time, we take that as a last question for today. I would now like to hand the conference over to Mr. Ashok Vaswani for closing comments.

Yes, guys, thank you so much. Really appreciate your being here. I know this is a heavy day for you, so I'm going to let you go and listen to the other calls as well. Thanks a lot. Bye. Bye-bye.

Thank you, members of the management. On behalf of Kotak Mahindra Bank Limited, that concludes this conference. Thank you everyone for joining us and you may now disconnect your lines. Thank you.