Annual Report 2020-21 Welcome Contents to Kotak Who we are 02 About Us Mahindra 04 Business Model Bank Our performance 06 Business Overview We expect more from ourselves, 12 Key Performance Indicators 14 Message From Uday Kotak than what others expect of us. 18 Board of Directors This is what helps us create 20 Resolute Response a rewarding and delightful experience for all our stakeholders, while remaining responsible and open to new ideas. Always. Our strategy and 24 Megatrends and Strategies initiatives 28 Growing Together 32 Digital Ecosystem Our responsible 36 Environmental, Social and Governance (ESG) Practices The world has been forced to embrace a pace of change, effecting approach a seemingly instantaneous generational shift. Almost instantly, almost everyone is online; almost everything is digital. The rules of social engagement have been replaced overnight with new behavioural traits. The ways of life are altered irreversibly. Recognition 39 Awards & Accolades received As we started clawing back to the known At Kotak, we have maintained a razor sharp normal, the pandemic reared its deadly head focus on protecting our people, customers with more intensity and devastating impact and balance sheet while recalibrating our Key highlights – leading to pronounced disruptions and strategies to pivot to emerging opportunities. of FY 2020-21 Financial 44 Consolidated underscoring the permanence of change. On the one hand, we are leveraging our highlights 45 Standalone Yet, it was never enough to overwhelm strong technology and digital capabilities to human resilience – as countries, societies and deliver seamlessly and manage risk prudently. individuals devised new ways to overcome the On the other, we are directing our energy 60.4% challenge and emerge stronger. Collectively, towards newer products, stronger digital Current Account and Savings Account we have ensured an unprecedented speed backbone and greater customer centricity, (CASA) Deposits (Bank Standalone) and scale of mass vaccinations, and rolled out making space for infinite possibilities to take Consolidated 46 Consolidation at a Glance economic stimulus to keep the wheels of the root in this never normal world. financial 47 Independent Auditor’s Report world in balance. 58 Financial Statements Powered by a strong governance culture, 4.5% statements 107 Financial Information of Subsidiaries This is not the new normal, for it is not steered by an experienced management team, Consolidated Net Interest and Basel III (Pillar 3) Disclosures gradual, nor expected or part of a sequence of we are building the Bank of the future with an Margin (NIM) logical and long-drawn events. We are now in agile workforce and a digital-first approach, the never normal, where constantly adopting driving pioneering change in the Indian and adapting to rapid change is, well, the banking industry. K9,990 cr norm. This is as true for organisations as it is Consolidated Net Profit Bank reports 109 Directors’ Report for individuals. and statements 144 Management Discussion and Analysis 185 Report on Corporate Governance Read the report or download at 214 Independent Auditor’s Report www.kotak.com 220 Financial Statements Never Normal Who we are Financial Highlights About Us 02 03 Consolidated Financial Statements Bank Reports and Statements About Us Re-engineering customer journeys across ecosystems ^ Physical footprint 1,604 2,598 Services Kotak has a wide distribution network of in New York, London, Mauritius, Dubai, Bank branches Bank ATMs Solutions for today branches and franchises across India. In Singapore and Abu Dhabi. addition, we also have an international # banking unit in Gujarat International Our reach extends beyond our physical 781 3,857 and tomorrow Finance Tec-City (GIFT City), a bank network, to a point where anyone in India Bank Pan-India Group branch branch in Dubai International Financial can open a bank account from the safety operating locations network in India Kotak Mahindra Group (Kotak) is a trendsetter in the Indian banking industry since its inception and Centre (DIFC), and international offices and convenience of their homes. continues to contribute to nation-building, as one of India’s leading banking and financial services institutions. As the world adapts to a new way of banking, we are fine-tuning our offerings to exceed ^Doesn’t include branches in GIFT City and DIFC (Dubai) customer expectations and remain ahead of the curve, by offering tailored solutions to meet evolving Bank branch distribution (No. I %) Bank branch classification (No. I %) customer needs and preferences. North Metro 485 | 30% 715 | 45% Kotak is one of India’s leading diversified microfinance and asset reconstruction, contemporary, customised and built for the East Urban and integrated financial services encompassing all customer and geographic not-as-usual world. 122 | 8% 341 | 21% conglomerates, providing a wide span segments within India. As a group, we West Semi Urban We are a `4.8 trillion institution of solutions across banking (consumer, also operate in overseas markets through 496 | 31% 292 | 18% commercial, corporate), credit and international subsidiaries or branches in (consolidated assets) with a market st South Rural financing, asset management, life key geographies. We are leveraging our capitalisation of `3.5 trillion (as on 31 501 | 31% 256 | 16% and general insurance, stock broking, expertise and presence to deliver a banking March, 2021). investment banking, wealth management, and financial services experience that is Group branch network in India # Kotak universe^ 114 230 1,450 87 19 353 #Kotak Securities network includes branches, franchises and referral co-ordinators ~ 17.8 mn K4,78,873 cr K3,82,000 cr Debit cards in force Total assets Wealth, priority and investment advisory relationship value 2.4 mn K2,78,871 cr K2,52,188 cr Credit cards in force Total deposits Total advances 72% * Growth in transaction K1,16,565 cr 73,000+ volume on mobile app Total investments Group employees Digital ecosystem • Human-led and digitally-assisted journeys We have designed our digital universe to where customers need handholding complement our physical infrastructure and (e.g. digital branches, automated tellers, 10.3x create a seamless experience between the home loan origination, biometric account Growth in UPI transactions 4,20,000+ 26 mn+ opening) acquired Shareholder base Number of customers of the Bank two ecosystems. This drives efficiency and enhances customer experience. Our services are available on a wide range of digital channels such as WhatsApp, • Fully digital engagement, when services missed call, chatbot, voicebot, mobile app 94%+ are pull-based (e.g. digital payments, and kiosk. Information and short videos are Savings account transactions service requests, chatbot and API services, made available in English, Hindi and other through digital or non-branch among others) languages. Bots are deployed to automate modes • Digital assisted by physical where deeper services, go paperless and deliver faster. interaction with customers is required ^All numbers are on a consolidated basis except where stated I *Excludes Policyholders' investments YoY (e.g. loan documentation) Annual Report 2020-21 Never Normal Who we are Financial Highlights Business Model 04 05 Consolidated Financial Statements Bank Reports and Statements Business Model DesignedDriven to deliver Core strengths Wide product portfolio Covering a wide cross-section of customers Creating value Kotak caters to the diverse financial needs of individuals and the Organisation structure and culture drives corporate sector. The bold vision that underscores Kotak’s growth cross-sell and customer cross-buying For customers Integrated financial services is an inclusive one, with a host of products and services designed across various products. • Offers one of the lowest home loan • Launched zero-contact, conglomerate with to address the needs of the unbanked and insufficiently banked. a diversified business model interest rates starting at 6.65%*p.a. completely digital and paperless applicable across all loan amounts video KYC account opening • Launched Cardless Cash process for Kotak 811 savings Withdrawals and ‘ATM on Wheels’ account Robust capital position – in six metro cities • Launched end-to-end digital 811 amongst the highest in the #DreamDifferent secured credit Indian banking sector • Launched end-to-end digital processing with online disbursal card for someone with no credit of personal loans for existing Bank score to help them get their first customers and end-to-end sanction credit card Wholesale banking Commercial banking Healthy asset quality and prudent process for home loans • Corporate loans risk management capabilities • Agriculture finance • Trade finance • Tractor finance Very large • Business banking • Commercial vehicles • Investment banking Corporate and @ • Commercial real estate • Construction equipment • Corporate banking For shareholders • Forex/treasury Institutional World-class digital capabilities and • Microfinance Large products 40% 22% • Cash management technology infrastructure • Transaction banking K3,47,416 cr K426.0 • Custody business Market capitalisation^ Book value per share • Off-shore lending Emerging corporates • Fund and fee based products 13% Ability to identify and capitalise • Salary products K50.5 12.8% on opportunities Small and medium Earnings per share (EPS) Return on equity (ROE) enterprises (SME) For employees • Provided logistical and financial Pan-India