Kotak Mahindra Bank Q1 profit rises 23% to Rs912.73 crore
Mumbai: Kotak Mahindra Bank Ltd on Thursday reported a 26.2% increase in consolidated quarterly net profit from a year ago as it benefited from loan growth and higher interest and non-interest income.
Profit rose to Rs1,346.82 crore in the three months to June, from Rs1,067.1 crore a year ago, Kotak Mahindra said. The bank missed the Rs1,372.20 crore estimate in a Bloomberg survey of three analysts.
The bank’s standalone net profit for the June quarter rose 23% year-on-year to Rs912.73 crore, missing the forecast of Rs963.40 crore by six analysts polled by Bloomberg.
Net interest income (NII), the core income a bank earns from its lending business after paying the cost of deposits, rose 17% to Rs2,245.55 crore from Rs1,919.10 crore. Non-interest income, which includes fees and commissions and treasury income, jumped 23.7% to Rs906.88 crore from Rs733.18 crore.
Net interest margin, the difference between the rate a bank pays for deposits and what it charges on loans, was 4.5%.
“Standalone profits have been driven by NII growth, and fee and service incomes. We witnessed topline growth in addition to flat expenses, except on the UPI-enabled banking app 811,” said Jaimin Bhatt, president and group CFO, Kotak Mahindra. UPI is short for unified payments interface.
Provisions and contingencies fell 23.8% to Rs203.74 crore in the June quarter from Rs267.37 crore in the preceding three months but were up from Rs179.51 crore a year earlier.
“The fact that provisions have fallen has also helped profits. Kotak Mahindra Bank has very little exposure to large corporates as it mostly lends to mid and small corporates,” said Asutosh Mishra, a research analyst at Reliance Securities Ltd.
Gross non-performing assets (NPAs) rose marginally by 4.1% to Rs3,726.62 crore from Rs3,578.61 crore in the March quarter but jumped 21.8% from Rs3,058.81 crore a year earlier. As a percentage of total loans, gross NPAs stood at 2.58%, against 2.59% in the previous quarter and 2.5% a year ago.
Net NPAs made up 1.25% of the loan book in the June quarter compared to 1.26% in the previous quarter and 1.21% in the same quarter last year.
The bank said that it has total exposure of Rs236 crore to four of 12 accounts identified by the Reserve Bank of India for insolvency proceedings. These four accounts were inherited from ING Vysya Bank during the merger in April 2015. The bank said that it had provided substantially more than the RBI’s mandate.
The bank also witnessed healthy growth in the loan book across various categories, which also supported overall profit. Demand was muted in its business banking vertical.
“There has been some slowdown in business banking because of demonetisation and the GST, because there is cautiousness when it comes to inventory clearance. There is some stress in the SME sector, so we have provided for it but it is marginal, so should not be a cause of worry,” said Dipak Gupta, joint managing director.
GST is short for Goods and Services Tax. SME stands for small and medium enterprise.
At the end of June, the bank’s standalone loan book was at Rs1.42 trillion, a jump of 18% year-on-year. The consolidated loan book was at Rs1.75 trillion, up 19% year-on-year.
Kotak Mahindra Bank shares closed at Rs980.4 on the BSE, down 1.44%, after trading at Rs1019.4, a 52-week high. The benchmark Sensex index fell 0.16% to 31,904.40 points.