Kotak Mahindra overtakes SBI as the second-most valuable bank by market cap
17 Apr 2018
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Private-sector lender Kotak Mahindra Bank (KMB) has overtaken State Bank of India, the country’s largest lender, to become the country’s second-most valuable bank behind HDFC Bank, in terms of market capitalisation.
In fact, SBI, the largest state-owned bank, is no more in the list of the country’s 10 most valued companies in the aftermath of a series of banking frauds and rising NPAs, which eroded Rs112,588 crore in market capitalisation of state-run banks.
Started by Uday Kotak as Kotak Capital Management Finance Ltd, which later became Kotak Mahindra Finance Ltd in 1985.
In 2003 it received a banking licence from the Reserve Bank, becoming India's first non-banking finance company to be converted into a bank, becoming Kotak Mahindra Bank Limited (Kmb) Ltd.
In 2015, Kotak Bank acquired ING Vysya Bank in a deal valued at Rs15,000 crore ($2.3 billion).
Shares of Kotak Mahindra Bank Ltd climbed 1.8 per cent on Tuesday, after closing 1.88 per cent higher on Monday, taking KMB’s market capitalisation to Rs2,22970.40 crore helping it beat the country’s largest lender, state-run SBI for the first time.
Against this, SBI's market capitalisation stood at Rs2,22,043.74 crore.
KMB’s market capitalisation stood at Rs2,23,000 crore at the close of trading on Monday, according to The Economic Times.
During intra-day trade on Monday, the Kotak Mahindra Bank scrip climbed 2.22 per cent to hit an all-time high of Rs1,174 apiece.
HDFC Bank, with a Rs5,03,000 crore market capitalisation, is the most valuable bank in India.
State-run banks, including SBI, have been reeling under non-performing assets (NPAs) and rising defaults. The nation's largest lender saw its net bad loans ratio spiking to 5.61 per cent of total advances, against 4.24 per cent during the third-quarter of 2017-18.
Gross NPAs jumped from 7.23 per cent and crossed the double-digit mark, at 10.35 per cent, during the quarter under review.
The SBI Group in February reported a massive Rs1,886.57 crore net loss for the December quarter of the previous fiscal as its bad loans and provisions spiked. The bank had reported a net profit of Rs2,152.14 crore for the October-December quarter of the 2016-17 fiscal.
The share price of Kotak Mahindra Bank Ltd (KMB) has gone up 12 per cent in the past month and by a whopping 229 per cent in five years. In fact, on Monday, it managed to steal State Bank of India's spot after its stock reportedly climbed 2.22 per cent, hitting a record high of Rs1,174 before closing at Rs1,170.05.
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