Gross NPAs rose to Rs 5,413 crore from Rs 5,033 crore in the September quarter.
Private sector lender Kotak Mahindra Bank on Monday reported a 24% year-on-year (y-o-y) rise in its net profit to Rs 1,596 crore for the quarter ended December, on the back of lower tax expense and a rise in non-interest income. The bank incurred a non-recurring expense of about `200 crore towards employee pension obligation during the quarter.
The net interest income (NII) — the difference between the interest earned and interest expended — saw an increase of 17.2% y-o-y to Rs 3,430 crore. The net interest margin (NIM) for the quarter stood at 4.69%, up 8 basis points from the year-ago period.
Non-interest income grew 37% y-o-y to Rs 1,341 crore. Gross NPAs rose to Rs 5,413 crore from Rs 5,033 crore in the September quarter. As a percentage of gross advances, gross NPA rose 14 bps to 2.46%. The net NPA came in at Rs 1,925 crore, or 0.89% of gross advances. The net NPA ratio was up 4 bps sequentially. Slippages, or fresh bad loans, came in at Rs 1,062 crore in the December quarter.
Provisions stood at Rs 444 crore in Q3FY20, compared to a net write-back of provisions worth Rs 32.3 crore in the previous quarter. The provision coverage ratio stood at 64.4%.
The loan growth decelerated to 10%
y-o-y, while gross advances stood at Rs 2.17 lakh crore. “In the wholesale segment, the number of lendable entities has shrunk,” said Dipak Gupta, joint managing director, adding, “The choice really is how much more you lend to them. On the retail side, growth is really good.” The corporate loan book grew by just 3% y-o-y during the latest quarter.
Gupta said one needs to look at trends in the wholesale and the SME (small and medium enterprises) side over the past two-three years. “Every quarter, you see new bullets, and every one of these bullets is in the realm of what I call the ‘unknown unknown’. You don’t expect the bullet to get shot but it does and it is not a sectoral problem. These are newer entities, and these entity-related issues are creating the problem.”
Special mention accounts (SMA2) — the portfolio of loans overdue by between 61 and 90 days — stood at Rs 274 crore, or 0.13% of net advances. “SMAs (special mention accounts) have come down. There’s good and bad news in that. No fresh SMAs have been created, so the future looks significantly better. But some of the SMAs have moved into the NPAs,” Gupta said.
The bank’s capital adequacy ratio stood at 18.21%. At the end of the December quarter, the share of current account savings account (CASA) deposits stood at 53.7%. Following the announcement of the results, shares of Kotak Mahindra Bank fell 4.7% to Rs 1,618.05 on the BSE.