Kotak Mahindra Bank on Saturday reported an 18% rise in net profit to Rs 4,133 crore in the fourth quarter of the previous financial year, driven by healthy loan growth. The lender surpassed street expectations, as Bloomberg analysts expected the bank to post Rs 3,304 crore net profit in the quarter.
Net interest income, the difference between interest earned and paid, rose 13% to Rs 6,909 crore in 2023-24 from Rs 6,103 crore in the same quarter of the previous fiscal. The bank’s results come nearly a week after the Reserve Bank of India (RBI) barred Kotak Mahindra Bank from taking on new customers through its online and mobile banking channels and issuing fresh credit cards due to information technology-related deficiencies. “The Reserve Bank of India order, obviously, has had an impact both on our franchise (and) our reputation, which does not feel good,” said Ashok Vasvani, MD and CEO, Kotak Mahindra Bank, in his first interaction with media after RBI’s action. “…we are committed to coming back strongly; that’s our number one priority.”
The bank will double its efforts, resources and money in addressing IT-related issues, Vaswani said, adding that the bank currently spends 10% of its total expenditure on IT.
“I am more worried about the reputational impact than I am about the financial impact. Financial impact in the scheme of things will be relatively small,” he said. He added that the bank’s credit card and 811 business will be impacted by the RBI’ restrictions.
Talking about the sudden exit of its former joint managing director KVS Manian, Vaswani said he wanted to pursue opportunities in the financial services sector. “Manian had aspirations… and wanted to pursue other opportunities in the financial sector which obviously made it a little more difficult from the timing perspective,” Vaswani said. “Manian does not have anything on his hands right now, to the best of my knowledge… Obviously, you’ll have to ask Manian that question,” he said.
The net interest margin of the bank contracted to 5.28% in the fourth quarter from 5.75% in the fourth quarter of the previous year. The bank’s advances increased 20% year-on-year (YoY) to Rs 3.9 trillion as on March 31, from Rs 3.2 trillion as on March 31, 2023.
Average current deposits grew to Rs 60,160 crore for Q4FY24 compared to Rs 58,415 crore for same quarter of previous year, showing a growth of 3%. Average savings deposits grew to Rs 123,457 crore for Q4FY24 compared to Rs 1.1 trillion for Q4FY23 up 5% YoY. Average term deposit grew to Rs 2.2 trillion for Q4FY24 compared to Rs 1.6 trillion for Q4FY23 up 35% YoY. Current account saving account (CASA) ratio stood at 45.5% as on March 31.
Kotak’s provisions and contingencies, net of recoveries made against bad loans, were Rs 264 crore, compared with Rs 148 crore a year ago. These included provisions made for alternate investment funds.