Kotak Bank standalone profit down 7 pct on M2M, treasury losses

Written by PTI | Mumbai | Updated: May 1 2014, 03:43am hrs
Private sector lender Kotak Mahindra Bank today reported a 7 per cent drop in standalone net profit to Rs 407.2 crore in the March quarter on mark-to-market and treasury losses along with higher tax outgo and bad loans.

For the full financial year, the bank's net income increased 10 per cent to Rs 1,503 crore.

"We took an MTM (mark to market) hit of Rs 43 crore in the quarter. Also, we have been reasonably conservative in provisions for existing loans. Last year for the same quarter we had very good treasury performance and hence the base was higher. If you take the implications of all these three, it is an accounting for the difference," Executive Vice-Chairman and Managing Director Uday Kotak said, adding that higher tax also dragged profit down.

However, provision was down to Rs 6.19 crore as against Rs 37.43 crore in the year-ago quarter.

On a consolidated basis, the bank saw a 13 per cent rise in net profit to Rs 2,465 crore for the full year as against Rs 2,188 crore last year.

Net interest income (NII) for the quarter rose 7 per cent to Rs 967 crore and 16 per cent to Rs 3,720 crore for the full year.

The net interest margin for the full year was at 4.9 per cent as against 4.65 per cent last year. Kotak said he expects the NIM to be at over 4.5 per cent this fiscal.

Gross non-performing assets (NPAs) in the quarter rose to 1.98 per cent from 1.55 per cent, while net NPAs almost doubled to 1.08 per cent from 0.64 per cent.

However, Kotak said bad loans are under control and "at least they are seeing some stabilisation of non-performing assets. From here on, we are hoping for some improvement in the NPA into the next year."

Kotak said he expected the economy to improve and clip at 5-5.5 per cent this year.

Advances grew 9 per cent to Rs 53,028 crore. Excluding commercial vehicle and commercial equipment loans, growth in advances was 17 per cent.

On growth in CV/CE, Kotak said the segment will perform better this year. "But we will wait for more evidence before we really go for full steam," he said.

"Depending on the political and economic situation, I would be confident to say that we will see loan growth of 15-20 per cent next year," Kotak said.

Savings deposits as on March 31 grew by 39 per cent to Rs 10,087 crore from Rs 7,268 crore.

Deposits as on March 31 were up 16 per cent year-on-year to Rs 59,072 crore from Rs 51,029 crore.

Capital adequacy ratio of the bank as per Basel III was 18.83 per cent and Tier I ratio at 17.77 per cent.

Restructured loans considered standard stood at Rs 10 crore.

The bank opened 70 branches in the quarter and its total branch network stands at 605 as at end March. It plans take the network to 715 by the end of this fiscal and 1,000 by end 2016.

When asked about Kotak Group plans to buy a stake in MCX, Kotak said, "We are always open to new ideas and growth opportunities for our bank. Therefore, if there is an appropriate opportunity we will certainly look at all opportunities."