Kotak Mahindra Bank net up 23%

Stock closes 5% higher following healthy growth

Private sector lender Kotak Mahindra Bank on Wednesday reported 23 per cent increase in its net profit on a consolidated basis to Rs 718 crore for the quarter ended September as compared to Rs 583 crore recorded during the same period of the previous year, mainly due to higher earnings from banking operations.

On a standalone basis, net profit was up 26 per cent to Rs 445 crore from Rs 353 crore reported during the same period of the previous year. Profit was higher on account of robust growth in other income, which comprises fee and treasury income.

While other income more than doubled to Rs 1,652 crore from Rs 713 crore during the period under review, fall in overall provisioning to Rs 58 crore from Rs 86 crore also helped its bottomline.

On the asset quality front, the lender reported nearly Rs 200 crore increase in gross non-performing assets (NPAs) to Rs 1,305 crore, which was 1.59 per cent of its total advances. Gross NPA ratio was 1.59 per cent at the end of September, 2013.

“Asset quality may not have improved significantly, but fresh flows into delinquencies is very limited now. So that gives a lot more confidence. You will see growth here on. It is more optimistic than what it was last year,” said Dipak Gupta, joint managing director, Kotak Mahindra Bank.

Net interest income, that is, the difference between interest earned and interest expended, grew by 12 per cent on the back of a 20 per cent year-on-year (y-o-y) growth in advances to Rs 60,948 crore. Without considering commercial vehicles and commercial equipment, the growth in advances was 28 per cent.

Deposits outpaced loan growth which grew by 29 per cent to Rs 68,103 crore, led by 39 per cent growth in savings bank deposit.

The bank’s stock closed 5 per cent higher on Wednesday at Rs 1,064.30 following the healthy growth in earnings.  

Net interest margin, on a consolidated basis, went up by 10 bps (y-o-y) to 5 per cent. The capital adequacy ratio of the bank according to Basel-III norms stood at 17.6 per cent at the end of September while the tier-I ratio stood at 16.6 per cent. The bank had raised about Rs 235-250 crore by way of infrastructure bonds.

Kotak Mahindra and associates are significant shareholders in Business Standard Limited