Kotak Mahindra Bank on Thursday reported a net profit of Rs 741.97 crore for the quarter ending June. In a post-results interaction with reporters, joint managing director Dipak Gupta spoke about the company’s results, his outlook on NPAs and the bank’s interest margins and the performance of its subsidiaries. Excerpts…
You have seen a significant improvement in your net interest margin this time around? Can you tell us where this expansion is coming from and whether the synergies will improve your NIM going forward?
I don’t think the synergies will improve the NIM significantly. But what will happen is that cost synergies and income synergies will start flowing in. The NIM will remain more or less the same but what you will see is the return on assets going up and cost to income coming down. Another thing that you will see is that, on the liabilities side, we have maintained the growth in both savings account and current account.
You witnessed a rise in NPAs this quarter, though the increase was marginal. What is your outlook on NPAs going ahead?
So last year’s figures are not strictly comparable. Last year, we had mentioned that, post merger, there was a large base of assets on our book that were under stress and that we would be providing for it through the year. But generally if you see the NPA position, I think it has sort of stabilised. We are seeing a marginal increase in the SME (small and medium-sized enterprises) segment. Right up till now, it was the large corporates that were majorly impacted but now we are seeing some of that reflect in SMEs too.
How many assets do you currently have under SMA2 category and how many of them do you expect to slip going ahead?
Well, SMA2 has grown from Rs 150 crore to more than Rs 450 crore. But I have to say that this like the peak position. I don’t think that they will slip from here, honestly, they should come down from here.
In terms of your subsidiaries, which vertical do you see growth coming from?
If you see, the performance of the subsidiaries has been flattish, quarter-on-quarter. The growth has essentially been on the bank’s side. But each of the subsidiaries I think, reflects the market they operate in, so if the market has been subdued, the performance of the subsidiary reflects that.