Kotak mkt value tops ICICI as profit soars1 min read . Updated: 27 Oct 2020, 06:11 AM IST
- NII grew 16.8% to ₹300 crore from ₹305 crore a year ago, while provisions fell to ₹368.59 crore from ₹407.93 crore
Kotak Mahindra Bank on Monday beat estimates to clock a September quarter net profit of ₹2,184 crore, up 26.7% from a year ago, aided by higher income and lower provisions. Top executives, however, said the private sector lender will remain cautious about lending till the economy recovers.
There is reason to be more cautious now than at the start of the pandemic, executive director Deepak Gupta told reporters after the earnings announcement. “While parts of the marketplace are coming back to normal, there is still a reasonable K-shaped recovery. Unfortunately, the upper part of ‘K’ is still small compared to the lower part," said Gupta. A K shaped recovery refers to parts of the economy recovering at different rates. “Until the economy comes back to normal, we have chosen market-linked growth during this period. Given the circumstances, this is a more secure way of growing. That’s why if you see the net interest income growth is very healthy. Now, as and when we see the credit market coming back to normal, the lending piece will also start." Gupta said non-urban sectors have done well and parts of retail have come back to normal.
Last year, the bank recorded a net profit of ₹1724.48 crore in the same quarter. This quarter’s earnings beat the median figure of ₹1,340 crore net profit estimated in a Bloomberg analysts’ poll by a wide margin. On a day the benchmark Sensex index fell 1.33%, shares of Kotak Mahindra Bank closed 2.36% higher, making it India’s second-largest bank by market value, beating ICICI Bank Ltd.
NII grew 16.8% to ₹300 crore from ₹305 crore a year ago, while provisions fell to ₹368.59 crore from ₹407.93 crore.
Asset quality improved, with gross non-performing assets as a percentage of total loans dropping to 2.55% against 2.7% in the June quarter. Loan book growth slowed to ₹2.04 trillion from ₹2.13 trillion a year ago.
The management also said it will use its capital cushion judiciously, and denied it was in talks to take over Indusind Bank Ltd. The management, however, said it is open to growth avenues.
Bloomberg contributed to the story.