‘Our plan is to grow at 30% on FY10 base’

KOTAK Mahindra Bank reported good numbers for the last quarter of FY10 and the full year. Uday Kotak, executive vice-chairman and managing director, Kotak Mahindra Bank, talks to ET NOWabout the bank's credit growth plans for this fiscal and how it is ready to take on competition in the investment banking business. Excerpts: 

A stellar set of numbers, the bank has completed 25 years and has just opened its 250th branch... you must be a satisfied man? 
It has been a great journey. It was a journey in many ways of a reforming India, a developing India. When we started this company, there was hardly any private sector in Indian financial services. In 2010, we have seen a significant structural change in the Indian economy and in the Indian financial sector and at Kotak we are really happy to see that we have been able to be the beneficiaries of the reform process and the economic growth process. 
Will moving from retail to the non-retail part of the business be an active strategy? 
Two-thirds of our lending business will continue to be retail and about a third would be wholesale. The reason for that is we as a bank are very focused on what we call risk-adjusted net interest margins. If you look at our net interest margin, at 6.3%, it is one of the highest in the Indian banking space and is reflective of the bank's high focus on risk-adjusted returns. 
Do you believe that FY11 will be a year of credit growth? 
We grew our advances in FY10 by 32% on a consolidated basis. When we look at FY11, our current plan is to grow at around 30% on the FY10 base. We think that's a decent level of growth on credit which we will achieve in 2010-11 — around 30% per annum. 
What is the outlook for your investment banking business? 
In the investment banking space, we are significantly improving our competitive positioning. We are doing a lot more work, we get a lot more calls from corporate clients. Consolidation is already beginning to happen in the minds of the clients, so that's good news for investment banking in the medium term. In the short run, most global players are in India. We are ready to face that competition, even if it means some fragmentation and margin pressure. As long as we serve clients and get mindshare of these clients, we think over time this business will produce returns. In the short run, even if there is some pains on margin, we are ready to live with it. We continue to be committed deeply to the investment banking space and believe that we are a dominant franchise.