Fitch Ratings maintain a stable outlook on Kotak Mahindra Bank
By Vaibhav Aggarwal
Jul 27, 2012
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Fitch Ratings has maintained a stable outlook on Kotak Mahindra Bank Ltd. The global ratings firm has rated the long term rating for the bank as stable at Fitch AA+(ind); while the short term rating is at Fitch A1+(ind).

Kotak Mahindra Bank was able to sustain its ratings mainly due to its risk management along with consistent good quality core capital, which has allowed the bank to keep its asset quality under control and to prevent any cylic pressure on the bank's loan books.

However the bank's higher involvement in wholesale loans and small franchise network constrains the ratings. Also bank's exposure to cyclical sectors and higher growth of loan books create a pressure on ratings.

Fitch stated that Kotak Mahindra Bank's capital adequacy is vital for its involvement in commercial vehicle loans which account for 15% of its loan book, loans against property (11%) and real estate (13%). It further stated that due to the economic scenario, coming two fiscals might see a pressire on bank's asset quality and loan book.

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