Kotak Mahindra Bank on Saturday announced an 81 % year-on-year jump in net profit to `6,249 crore for the June quarter, helped by the sale of majority stake in its subsidiary Kotak General Insurance. The lender surpassed Street expectations as Bloomberg estimates had pegged the profits at Rs 3,760 crore.
Excluding the gains of Rs 2,730 crore from the divestment of its stake in its subsidiary, the bank’s profit after tax stood at Rs 3,520 crore for the quarter.
The bank, on June 18, completed the sale of 70% stake in its subsidiary, Kotak Mahindra General Insurance to Zurich Insurance Company.
“It has been a very busy quarter for us. Year-on-Year, all our businesses have had good growth. The divestment of our general insurance business was hugely value accretive for our shareholders,” said Ashok Vaswani, CEO, Kotak Mahindra Bank, in an earnings call.
The private lender, which was barred by the Reserve Bank of India to add customer digitally, has formulated a plan to fix all outstanding issues.
“On technology side, we have made significant progress during the quarter.
“In consultation with the RBI, we have put together a comprehensive plan to fix all outstanding issues,” said Vaswani. “We have appointed GT (Grant Thornton) Bharat as an external auditor with the approval of the RBI” he added.
On April 24, the RBI barred Kotak Mahindra Bank from issuing fresh credit cards and onboarding of new customers through its online and mobile banking channels with immediate effect.
Net interest income, the difference between interest earned and paid, rose 10% to `6,842 crore in the June quarter of current fiscal while other income rose 9% year-on-year to `2,929 crore.
Its net interest margin (NIM) declined to 5.02% in the quarter from 5.57% in the same period last year, and was also lower than the 5.28% of the January-March quarter.
The bank improved asset quality as its gross non-performing assets (GNPA) stood at 1.39 % in the first quarter of current fiscal compared to 1.77% in the same quarter last year.
Net NPA came at 0.35% versus 0.44 % last year. The bank’s provisions for the quarter rose to `578.5 crore, up from `364.3 crore year-on-year and `263.7 crore in the previous quarter.
The lender is planning to open 200 branches in the current financial year. The bank’s advances increased by over 20% YoY to `4.05 trillion as of June 30, 2024. The deposits grew by 21% YoY to `4.35 trillion at the end of June 2024.
The share of low-cost deposits Current Account and Savings Account (CASA) declined to 43.4 % at the end of June 2024 from 49 % at the end of June 2023.
“Although Earnings (excluding one off) were broadly in line but NII was weaker due to higher than expected NIMs compression. Overall deposit growth was weaker than expectation led by CASA although term deposit growth was healthy,” Rahul Malani, Deputy Vice President, Fundamental Research, Sharekhan by BNP Paribas.
“Loan growth remained healthy led by pick up in corporate loan growth and growth in unsecured retail advances particularly personal loans & credit cards has slowed down which is on expected lines mainly due to RBI sanctions,” he added.