Kotak Mahindra net up 27%; NIM contracts

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SummaryKotak Mahindra Bank on Thursday posted 27% growth in consolidated net profit to R416 crore in the June 2011 quarter, led by lower provisioning and higher loan growth but margins came under pressure as cost of funds rose.

Kotak Mahindra Bank on Thursday posted 27% growth in consolidated net profit to R416 crore in the June 2011 quarter, led by lower provisioning and higher loan growth but margins came under pressure as cost of funds rose. The bank’s net interest margin (NIM) fell 40 basis points to 5% from 5.4% in the previous quarter.

“Our NIMs have dropped largely on account of increase in cost of funds rather a drop in yields,” said Jaimin Bhatt, CFO, Kotak Mahindra Bank. “Going forward, we expect our margins to remain at 5% levels,” he said.

Shares of Kotak Mahindra Bank on Thursday closed at R475.9, down 2.98%, underperforming the benchmark Sensex, which fell 0.36%.

Consolidated net interest income (NII) during the quarter rose 27% to R921 crore from R725 crore in the corresponding quarter a year ago.

Consolidated advances were up 36% to R44,699 crore as on June 30 from R32,978 crore a year earlier. The bank saw good loan growth in commercial and wholesale banking segments, while growth was sluggish in consumer segment. The bank also took a a hit on the treasury portfolio on account of higher interest rates. The bank is expecting to clock a better than industry growth rate of 25-30% in advances in the current year.

Bank’s Casa ratio stood at 27% down from 28% in the previous year. On a standalone basis, it posted a net profit growth of 35% to R252 crore.

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