Kotak Mahindra Bank’s net profit grew 26.7% year-on-year (y-o-y) during the September quarter to Rs 2,184.5 crore, driven by interest income and other income. Provisions during the quarter declined 9.6% to Rs 369 crore. Operating profit rose 31% y-o-y to Rs 3,297.5 crore, even though advances fell 4% compared to last year.
The lender’s net interest income (NII) increased 17% y-o-y to Rs 3,913 crore. Sequentially, NII increased 5%, compared to Rs 3,723 crore. Other income increased 18.6% y-o-y and a whopping 88% quarter-on-quarter to Rs 1,452 crore. Excluding fees and services, other income grew six times to Rs 392 crore during the quarter under review, from Rs 62 crore in the year-ago period.
The provision coverage ratio stood at 75.6% as on September 30, 2020. The asset quality showed an improvement in the September quarter, with gross NPA ratio improving 15 basis points (bps) to 2.55%, compared to 2.7% in the previous quarter. Similarly, the net NPA ratio came down 23 bps to 0.64% from 0.87% in the June quarter.
The bank has not declared any new non-performing assets (NPAs) since August 31, 2020, due to the interim order of the Supreme Court. The apex court had earlier directed banks not to recognise fresh NPAs till further orders in the interest-on-interest case. A public interest litigation (PIL) was earlier filed in the Supreme Court to waive off interest on interest for borrowers during the moratorium period between March and August 2020. “If the said order was not given effect to, gross NPA would have been 2.7% and net NPA 0.74%,” said Jaimin Bhatt, president and group chief financial officer, Kotak Mahindra Bank. The bank has also made provisioning of Rs 92-93 crore on account of accounts not being declared as NPA, Bhatt said.
The net interest margin was at 4.52% in the September quarter, showing a y-o-y decline of 9 bps and a quarter-on-quarter jump of 12 bps. Deposits grew 12.3% y-o-y to Rs 2.61 lakh crore, compared to Rs 2.33 lakh crore in the corresponding quarter last year. Current account savings account (CASA) ratio stood at 57.1%, compared to 53.6% as on September 30, 2019.
Advances declined 4% y-o-y in the September quarter to 2.04 lakh crore, compared to Rs 2.13 lakh crore as on September 2019. The bank continues to remain cautious on unsecured retail credit. “Secured side opportunity seems to be coming back. For example, in Maharashtra, we are seeing a significant demand in home loan after reduction in the stamp duty,” said Bhatt.
The bank refused to offer any comment on possible takeover of IndusInd Bank. “We will not comment on any speculation. As and when there is something to report, we will get back, “ Bhatt said.