Growth in corporate loan book props up KMB profit by 29%

Kotak Mahindra Bank reported a 29% increase in net profit to R527 crore for Q4FY15, helped by a 15% y-o-y growth in its corporate loan book.

Net interest income rose 16% y-o-y to R1,123 crore and net interest margins fell 10 bps y-o-y to 4.8% at the end of March 31, 2015. Other income nearly doubled y-o-y to R668 crore. Advances as on March 31 grew 25% to R66,161 crore, while savings deposits rose 39% to R14,036 crore.

“Corporate advances have grown faster than retail advances,” said Uday Kotak, executive vice-chairman & managing director of Kotak Mahindra Bank. “Within corporate advances, it is more working capital and transaction banking oriented business that has grown faster. We have still not seen any demand for project finance coming in for FY15.”

Retail banking revenue grew 29% to R292 crore, while treasury income jumped nine times to R63 crore, compared with Q4FY14 numbers.

“We have gained on treasury in the full year thanks to the interest rates that have softened,” said Jaimin Bhatt, chief financial officer, Kotak Mahindra Bank.   Asset quality deteriorated, and the gross non-performing assets (NPAs) stood at R1,237 crore, or 1.85% against gross advances. The bank posted net NPA of R609 crore, or 0.92% against net advances.

Standard restructured loans at the end of the March quarter was R158 crore, or 0.24% of net advances.

On November 21, the Uday Kotak-led bank had announced its merger with ING Vysya Bank, with the deal valued at approximately R15,000 crore. The merger was concluded at the end of fiscal 2015, with the operations of the combined entity beginning on April 1. ING Vysya Bank will not announce Q4FY15 results this year and combined results of both banks will be announced beginning with the April to June 2015 quarter.

“Treasuries of both banks were fully integrated on day zero, which is April 1, and very shortly we will first complete the integration of the wholesale bank and then move to retail integration,” Kotak said.

To commemorate 30 years of existence, completion of the merger and a profitable year, Kotak Mahindra Bank announced a bonus issue in the ratio of 1:1. The private lender’s issued equity capital consists of 77.23 crore shares.

The scrip closed up 6.5% at R1,423.65 on Tuesday on the Bombay Stock Exchange.

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