Kotak Mahindra Bank net jumps 33% to Rs 1,682 crore

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Kotak Mahindra Bank on Monday reported a 33% year-on-year (y-o-y) jump in its net profit to Rs 1,682 crore for the quarter ended March because of higher net interest income (NII). The bank was able to register growth in the bottom line despite a 181% quarter-on-quarter (q-o-q) and 13% y-o-y jump in provisions to Rs 1,179 crore. The operating profit increased 25% y-o-y to Rs 3,407 crore as the net interest income (NII) grew 8% y-o-y to Rs 3,843 crore.

Uday Kotak, MD and CEO, said, “I hope the Covid-19 situation is short lived and it will be like the UK, where it sharply went up and then came down sharply too.” The bank has decided to curtail deployment of employees in non-essential activities, including physical collections for a week at least, due to Covid-19 situation. “Yes, it is a risk that the bank is taking for short term but people balance sheet is more important to us,” Kotak said.

The net interest margins (NIM) declined 33 basis point (bps) y-o-y and 12 bps sequentially to 4.39%.

The asset quality improved during the March quarter. Gross non-performing assets (NPAs) ratio improved 2 bps to 3.25%, compared to reported proforma gross NPAs of 3.27% in the previous quarter. Similarly, net NPAs ratio improved 3 bps to 1.21% from 1.24% in the December quarter. Lenders had reported NPAs on a proforma basis during the December quarter due to a standstill from apex court on declaring NPAs.

Fee and service income grew 23% q-o-q and 9% y-o-y to Rs 1,378 crore. Overall, other income grew 31% y-o-y to Rs 1,949 crore.

Advances grew 4.5% q-o-q and 1.8% y-o-y to Rs 2.23 lakh crore. The lender has registered a 10% y-o-y growth in home loan. The bank does not plan to raise home loan rates as of now. It continues to be conservative in unsecured retail business.

Deposits grew 6% y-o-y as well as sequentially to Rs 2.8 lakh crore. Current account savings account (CASA) ratio as on March 31, 2021 stood at 60.4%, compared to 56.2% in the March quarter last year.

The capital adequacy ratio (CAR) stood at 22.3% with CET1 ratio of 21.4% at the end of March 2021.

The board has recommended dividend of Rs 0.9 per equity share for the year ended March 31, 2021, subject to approval of shareholders.