Despite falling margins, private sector lender Kotak Mahindra Bank has reported a 19 per cent increase in consolidated net profit in the second quarter ended September 30 in comparison to same period last year.
The bank made a consolidated net profit of Rs 433 crore in Q2 of 2012 as against Rs 364 crore in same period last year. Advances grew 35 per cent at Rs 50,581 crore in the second quarter from Rs 37,515 crore in the same period previous year.
Uday Kotak, the bank’s executive vice-chairman and managing director, said despite the robust growth in advances, Kotak Mahindra’s non-performing assets have reduced to 0.36 per cent. “We have the lowest restructured asset portfolios among all banks,” he said, adding that the bank has minimal or no exposure to airlines and infrastructure sector.
“The credit demand has grown up 35 per cent on a year-on-year basis. Our guidance is that it will grow 30 per cent,” he added. The bank has increased its exposure in financing agro business and purchase of tractors and small-size commercial vehicles.
The bank’s consolidated income, which includes revenue from securities business, insurance and asset management, dropped 7 per cent to Rs 2,740.83 crore largely due to a decline in insurance premium collection. Expenses came down 12 per cent in second quarter of FY12.
The net interest income of the bank on a stand-alone basis rose to 18 per cent to Rs 605 crore as against Rs 512 crore in Q2 of 2011. Deposits were up 29 per cent to Rs 36,390 crore at the end of second quarter.
However, the bank’s net interest margins (NIM) fell in the second quarter. The NIM fell from 5.2 per cent to 4.8 per cent on a Y-o-Y basis. This, the bank said, was due to increased cost of borrowing. “We will not compromise on quality of credit,” Kotak stated.
On a consolidated level, the bank has provided Rs 27 crore as provisions against bad loans, down from Rs 47.44 crore a year ago. Today, the bank’s stock rose 5.23 per cent to close at Rs 494.85 on Bombay Stock Exchange.