In a significant development on Friday, Mumbai-based Kotak Mahindra Bank announced its acquisition of Sonata Finance for Rs 537 crore ($72 million), following the Reserve Bank of India's approval on Thursday. The acquisition, initially made on February 10, 2023, will allow Kotak to deepen its presence in the rural and semi-urban regions of north India. As of December 2022, Sonata had Rs 1,903 crore ($256 million) assets under management and served around 900,000 people. Post-acquisition, it will function as a wholly-owned and business correspondent subsidiary of Kotak.
According to InvestingPro data, Kotak Mahindra Bank, also known as KTKM, has shown accelerating revenue growth and consistently increasing earnings per share. However, the bank has been quickly burning through cash, which could potentially affect its dividend payments. Despite this, the bank has managed to raise its dividend for 3 consecutive years. It's worth noting that the bank is a prominent player in the Banks industry and stockholders have been receiving high returns on book equity, as per InvestingPro Tips. More insights like these can be found here.
On the same day, the Competition Commission of India (CCI) approved the merger of IDFC Ltd with IDFC FIRST Bank. This follows the merger of IDFC Financial Holding into IDFC Ltd and its subsequent amalgamation with IDFCL. The merger received nods from the boards of both IDFC FIRST Bank and IDFC.
IndusInd Bank also reported a 22% rise in its Q2 net profit due to a 21% loan book growth, 14% deposit growth, and increased net interest income. The bank's new app also contributed positively to this uptick. However, a surge in operating expenses by 25% curtailed operating profit growth.
The National Company Law Tribunal in Kolkata approved the resolution plan for Birla Tyres, a subsidiary of Kesoram Industries Ltd founded in 1991. With a total debt of Rs 1,100 crore ($148 million), Axis Bank emerged as the highest claimant in the Rs 300 crore ($40 million) bid for Birla Tyres.
The day ended on a less positive note for some. The Reserve Bank of India (RBI) fined ICICI Bank a record Rs 12.2 crore ($1.64 million) for violating lending rules, marketing non-financial products, and late fraud reporting. This fine exceeded those levied on HDFC Bank and other private banks in FY23. Kotak Mahindra Bank was also penalized, receiving a Rs 4 crore ($0.54 million) fine for contravening risk management and related regulations. In light of these events, InvestingPro's real-time metrics show a significant price drop for these banks over the last year, with a 95% decline in the 1 Year Price Total Return.
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