Kotak Mahindra Bank’s net profit for the quarter ended March was up 13.4% on year to Rs 4,027 crore on the back of improving income and a fall in provisions. Analysts had pegged the bottom line for the private sector bank at Rs 3,784 crore, according to Bloomberg estimates.
The net interest income of the lender was up 8% on year to Rs 7872 crore, higher than the Bloomberg estimate of Rs 7,634 crore, for the reporting quarter. The other income moderated by 2% on year to Rs 3116 crore. However, on a sequential basis, the other income rose almost 10%.
The net interest margins inched up from 4.54% in Oct-Dec to 4.67% in Jan-Mar. Devang Gheewala, chief financial officer of the bank said that going forward he expects to see a more gradual decline in margins.
Portfolio Growth
The net advances of the bank were up 16% on year to Rs 4.96 crore as on March 31, with the consumer banking book up 14% on year and the commercial bank book up 8% on year. The corporate banking book was up 22% on year to Rs 1.13 lakh crore. Small and medium enterprise (SME) portfolio book also grew 19% on year. The credit card book declined 8% on year. Anup Saha, whole time director said that the bank will focus on affluent customers and expects to see a pickup in the book in the current financial year.
The unsecured retail advances formed 8.9% of the net advances as on March end. Ashok Vaswani, managing director and CEO said that the bank wants to grow the unsecured book but not at the cost of the growth in the secured book.
On talks around the bank in the race to acquire Deutsche Bank’s retail business, Vaswani said that they are “Constantly looking for opportunities in the marketplace. We have a set of criteria for any new opportunity; we will go through the same logic for Deutsche as well.”
Operational Resilience
Deposits for the private sector bank was up 15% on year to Rs 5.72 lakh crore, out of which current account and savings account deposits stood at Rs 2.48 lakh crore. The CASA ratio stood at 43.3% as on March 31.
The credit-deposit ratio for the bank was at 86.6% as on March 31. Gheewala said that they are quite comfortable in the 86-87% range. Cost of funds stood at 4.45% in the reporting quarter as against 4.54% a quarter ago.
The provisions and contingencies fell 43% on year to Rs 516 crore in the reporting quarter. The provision coverage ratio stood at 79% as on March 31. The annualised credit cost for Q4 stood at 0.39% as compared to 0.64% in Q4FY25 and 0.63% a quarter ago.
The asset quality too improved for the bank, with gross non-performing asset (NPA) ratio at 1.20% as on March 31, as against 1.30% a quarter ago, and the net NPA ratio stood at 0.25% as compared to 0.31% a quarter ago. Fresh slippages declined to Rs 1,018 crore as compared to Rs 1,488 crore as reported a quarter ago.
On the final expected credit loss (ECL) guidelines, Gheewala said that as per their estimates made from the December the impact would be around 2% of the net worth. “We don’t see any significant impact on the capital adequacy ratio and the profitability going ahead,” he added. The capital adequacy ratio of the bank 22.40% as on March 31.
Speaking on the impact of the West Asia crisis, Vaswani said that that as of now they are not seeing any immediate impact on their books. However, the bank has stepped up monitoring on all their portfolios.
The board of the bank recommended a final dividend Rs. 0.65 per equity share of the face value of Re. 1 each, out of the net profits for financial year ended March 31. On Friday, the shares of Kotak Mahindra Bank closed 0.34% higher at Rs 383.30 on NSE.