Kotak Mahindra Bank Set to Acquire Standard Chartered Bank’s Personal Loan Book

Kotak Mahindra Bank: Kotak Mahindra Bank has acquired Standard Chartered Bank’s personal loan business in India. Standard Chartered will now focus on wealth and investment banking in the country.

As of September 30 Standard Chartered’s personal loan book in India was Rs 4,100 crore ($488 million). The personal loan space is highly competitive in India due to high consumer demand. To mitigate the risk the central bank has asked lenders to hold more capital for personal loans.

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This has led to a slowdown in banks’ personal loans growth to about 17% yoy in August from 18.3% yoy a year ago.

"India's unsecured lending market offers significant growth potential for Kotak, especially in the higher-end segment," said Ambuj Chandna, head-products, consumer bank at Kotak Mahindra Bank.

The deal includes standard loans which are loans that are currently performing well without any signs of stress or default as per RBI guidelines.

Kotak Mahindra Bank said the transaction is expected to be completed within the next three months subject to regulatory approvals and other closing conditions. It will leverage its technology and commitment to excellent customer service to ensure a seamless transition for current Standard Chartered Bank customers who have personal loans.

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"Our decision to divest the personal loan book is in line with the bank's focus to accelerate growth in the wealth, affluent and SME (small and medium enterprises) segment," said Aditya Mandloi, Standard Chartered Bank's head of wealth and retail banking for India and South Asia.

Mandloi said India will remain a key market for StanChart and the bank will continue to invest and grow in the country.

Kotak Mahindra Bank Ltd will announce its quarterly results for July-September on Saturday, October 19. Analysts expect NII and net profit to be subdued for the quarter. NII is expected to be in the range of Rs 6,850-7,150 crore, 10-12% YoY but flat compared to the previous quarter.

Standalone net profit is expected to grow over 10% yoy at Rs 3,375 to 3,560 crore. But this is much lower than the previous quarter’s net profit of Rs 6,250 crore. Experts say higher operating expenses and lower other income will hit the bottom line.

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