Kotak Mahindra vs IndusInd Bank vs Axis Bank: When we talk about banks in India there are a few names that pop up instantly. But as an investor, which bank could be your best investment option? For that, you need to know how well the bank is performing. And this article is about just that.
So far we have covered the comparison of any two stocks from the same industry which are giving neck-to-neck competition to each other. In this article, we bring to you the comparison of the top three private sector banks- Kotak Mahindra vs IndusInd Bank vs Axis Bank. Keep reading to find out!
Table of Contents
Industry Overview
In the fiscal year 2021, private sector banks across India earned a total income of almost 5.46 trillion Indian rupees. This marked an increase compared to 2019 when the total income of private sector banks amounted to under 5 billion rupees.
However, this positive news comes with a darker side. Indian banks have been facing an asset crisis and in the fiscal year 2021, the value of non-performing assets(NPAs) of private banks across the country amounted to around 2 trillion Indian rupees.
In FY21, total assets in the public and private banking sectors were US$ 1,602.65 billion and US$ 878.56 billion, respectively.
About the company
Kotak Mahindra Bank Ltd
Kotak is one of India’s leading diversified and integrated financial services conglomerates. Its services include s banking (consumer, commercial, corporate), credit& financing, asset management, life and general insurance, stockbroking, investment banking, wealth management, microfinance, and asset reconstruction.
As of FY21, the company has 1,604 bank branches across the country with 2,598 Bank ATMs and a total of 3,857 Group branch networks. Apart from that, the company has more than 17.8 million Debit cards and 2.4 million Credit cards in force as of March 2021.
IndusInd Bank
IndusInd Bank Limited has derived its name from the Indus Valley Civilisation. Incorporated in 1994, it is a new-generation Indian bank that offers commercial, transactional, and electronic banking products and services. It serves both individual and corporate customers through its services.
The company has increased its network to over 2,015 Branches and 2,872 ATMs spread across 760 Geographic locations. Apart from that, the Cards in use crossed the 1.5 million mark, an increase of 13% over the previous year. As of FY21, it is the fifth-largest private sector bank within the NRI segment with a 2.5% market share.
Axis Bank
Axis Bank is the third-largest private sector bank in India. The Bank offers the entire spectrum of financial services to customer segments covering Large and Mid-Corporates, MSME, Agriculture, and Retail Businesses.
As of FY2, Axis bank has more than 4,594 branches and around 17,043 ATMs and cash deposits/ withdrawal machines. It is the 4th largest card issuer in India. Axis bank has created a robust digital banking ecosystem over the years with a 16% market share in mobile banking and a 17% market share in UPI. It has 7.15 Million active credit cards and 23.83 million active debit cards in force.
Financials of the company
Let us have a look at the financials of each of the companies.
Revenue & Profit
The total income of the bank comprises mainly income from interest earned from loans and interest earned from investments. Out of the three banks, the highest income is earned by Axis bank with Rs 80,847.94 Cr FY21 followed by Kotak Mahindra Bank and Induslad bank with Rs 56,814.77 & Rs 35,500.68 Cr respectively.
In terms of net profit, Kotak Mahindra bank is in the lead having earned a total of Rs 9,990.20 Crs followed by Axis Bank which earned Rs 7,195.50, and Indusland bank with Rs 2,930.10 Cr.
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Total Income (Rs in Cr) | |||||
| Kotak Mahindra | 33,983.77 | 38,813.31 | 45,979.11 | 50,365.74 | 56,814.77 |
| IndusInd Bank | 18,577.16 | 22,030.85 | 27,907.87 | 35,735.50 | 35,500.68 |
| Axis Bank | 57,596.70 | 58,476.67 | 70,232.41 | 80,057.67 | 80,847.94 |
| Interest Earned (Rs in Cr) | |||||
| Kotak Mahindra | 22,324.21 | 25,131.08 | 29,831.22 | 33,474.16 | 32,819.83 |
| IndusInd Bank | 14,405.67 | 17,280.75 | 22,261.15 | 28,782.83 | 28,999.80 |
| Axis Bank | 45,175.09 | 46,614.06 | 56,043.65 | 63,715.68 | 64,696.42 |
| Net Profit (Rs in Cr) | |||||
| Kotak Mahindra | 4,940.43 | 6,200.97 | 7,204.13 | 8,593.36 | 9,990.20 |
| IndusInd Bank | 2,868.17 | 3,606.12 | 3,300.75 | 4,458.18 | 2,930.10 |
| Axis Bank | 3,953.03 | 455.82 | 5,038.59 | 1,853.11 | 7,195.50 |
Operational Capacity
Gross Non-Performing Assets refers to the sum of any unpaid debt which becomes a bad asset for the bank. The ratio of the gross NPA shows the asset quality of the bank, the higher the ratio, the lower the asset quality.
Out of the three banks in comparison, it can be seen that Axis bank has been consistent in decreasing its GNPA ratio while Kotak bank and Indusland bank have shown an increasing trend.
The CASA ratio indicates how much of a bank’s total deposits are in both current and savings accounts. A higher CASA ratio indicates a lower cost of funds as banks pay lower interest on current account deposits.
Kotak Mahindra Bank has been able to increase its CASA ratio over the years. While both Indusland bank and Axis bank have seen a decline in the ratio in the last 4 years.
| 2018 | 2019 | 2020 | 2021 | 2022 | |
|---|---|---|---|---|---|
| Gross NPA | |||||
| Kotak Mahindra | 1.95 | 1.94 | 2.16 | 3.22 | 2.37 |
| IndusInd Bank | 1.17 | 2.1 | 2.45 | 2.67 | 2.27 |
| Axis Bank | 6.77 | 5.26 | 4.86 | 3.7 | 2.82 |
| CASA Ratio | |||||
| Kotak Mahindra | 50.75 | 52.49 | 56.16 | 60.44 | 0 |
| IndusInd Bank | 44 | 43.14 | 40.37 | 41.81 | 0 |
| Axis Bank | 53.75 | 44.37 | 41.19 | 44.92 | 0 |
Financial Ratios
Net interest margin (NIM) reveals the amount of money that a bank is earning in interest on loans compared to the amount it is paying in interest on deposits. A higher ratio is considered better. Out of the three banks, Kotak Mahindra bank has the higher ratio followed by Indusland bank and Axis bank.
The credit deposit ratio, also known as the Loan deposit ratio measures the value of a bank’s loans to the value of its deposits. The higher the ratio the better. While all three banks saw a declining ratio in the last 5 years, Kotak Mahindra bank has the highest ratio in comparison to others.
The net profit margin ratio shows how profitable the company is in terms of the revenue that it generates. If we take a look at FY21, Kotak Mahindra had the highest ratio followed by Axis bank which has a ratio of 11.21%, and IndusInd Bank with 10.1%.
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Net Interest Margin (NIM) | |||||
| Kotak Mahindra | 4.16 | 3.94 | 3.87 | 4.13 | 4.35 |
| IndusInd Bank | 3.6 | 3.6 | 3.4 | 4.26 | 3.99 |
| Axis Bank | 3.28 | 2.94 | 2.96 | 3.08 | 3.22 |
| Credit Deposit Ratio (CDR) | |||||
| Kotak Mahindra | 107.45 | 107.72 | 108.29 | 95.96 | 90.43 |
| IndusInd Bank | 89.34 | 95.59 | 95.65 | 102.35 | 83.09 |
| Axis Bank | 91.85 | 98.72 | 91.99 | 90.78 | 89.75 |
| Net Profit Margin | |||||
| Kotak Mahindra | 22.17 | 24.46 | 23.87 | 25.71 | 30.17 |
| IndusInd Bank | 19.91 | 20.87 | 14.83 | 15.49 | 10.1 |
| Axis Bank | 8.78 | 1 | 9.01 | 2.95 | 11.21 |
Stock performance
Kotak Mahindra Bank Ltd: The bank has a market capitalization of Rs 354,031 Crores. The current market price of each share is Rs 1,782.50. During the last month, the stock has gained around 3.56% while on a yearly basis it has only surged by 4.35%.
Indusind Bank Ltd: The bank has a market capitalization of Rs 67,114 Crores. Due to the recent market turmoil, the stock has declined by more than 10.78% in the past month and is currently trading at Rs 867.75 per share.
Axis Bank Ltd: The bank has a market capitalization of Rs 199,678 Crores. In the last one month, the shares of the bank have lost more than 18% and are trading at Rs 649.75. It recently touched its 52-week low of 630.
Future prospects of the banks
Kotak Mahindra
The company is moving ahead with the motto “Change is the only constant” and with the goal of achieving more growth in the coming years. For this, the management will have a key focus on adapting risk management strategies to be better prepared for any situation. It also aims to become more Customer-focused to deliver the best service among its competitors.
It is also working towards improving its digital presence and improving its services based on that. They have also undertaken a mindset shift to make retail and commercial lending our focus, in addition to the corporate and deposit franchise. On a consolidated basis, the bank will also channel its other subsidiaries to boost its position going forward.
IndusInd Bank
With a focus on customer-centricity and human-centred design, IndusInd Bank is set to start its Digital 2.0 journey. The Bank has created a Digital Centre of Excellence and is taking a comprehensive view to deploy new-age digital platforms and build end-to-end digital client value propositions.
Their 5 key initiatives will be Indus Easy Credit for unsecured retail loans, Digital ecosystem for used vehicles, Merchant solutions app, Dierentiated payments and nance solution for individuals, and SME trade and credit stack going forward.
Axis Bank
The bank has a continued focus on strengthening the core pillars of its franchise – people, products, and technology for driving excellence. The management has also accelerated their investment in technology to bring about innovation in the way the projects are executed.
The bank has adopted a cloud-first approach for its digital banking platform with over 50 initiatives on the cloud, which is one of the highest in this area within the Indian financial service sector. They are building strong partnerships with large players in the retail payments space to scale up their business further.
In closing
In this article, we looked at not two but three of India’s biggest players in the private banking sector. With millions of customers and significant market share across various segments, three of the banks are giving tough competition to each other.
Going forward, who leads the race will depend upon the strategies adopted by them which will set the standards of their services. That’s all for this post on Kotak Mahindra vs IndusInd Bank vs Axis Bank. Happy Investing!
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