Kotak Mahindra Bank Q1 net rises 291% to Rs 742 cr

Management says bank returning to its former efficiency parameters

Private sector lender Kotak Mahindra Bank reported 291 per cent year-on-year rise in its June quarter standalone net profit at Rs 741.97 crore, compared with Rs 189.78 crore in the same period a year ago. The management guided that the bank was returning to its former efficiency parameters as the merger with ING Vysya Bank has brought good synergies for the lender.

In the June 2015 quarter, the bank had booked more than Rs 300 crore towards pension liabilities of ING Vysya and an additional cost of about Rs 60 crore towards stamp duty, which subdued the profit in that quarter, said Jaimin Bhatt, president & group CFO, Kotak Mahindra Bank.

On consolidated basis, net profit grew to Rs 1,067 crore, against Rs 517 crore in the June 2015 quarter.

Net interest income, or interest earned minus interest expended, rose 20 per cent year-on-year (y-o-y) to Rs 1,919 crore in the June quarter. The bank’s other income registered a growth of 23.60 per cent y-o-y to Rs 733 crore in the first quarter. The year ago quarter numbers had included a reversal of income of Rs 62 crore on account of credit event with regard to a derivative customer.

The net interest margin of the bank stood at 4.37 per cent in Q1 FY17, up 2 basis points sequentially and 19 basis points over the June 2015 quarter. The bank’s capital adequacy ratio was at a healthy 17.3 per cent.

The bank’s gross non-performing assets (NPAs) ratio widened to 2.50 per cent of gross advances against March quarter’s 2.36 per cent and 2.31 per cent a year ago. Net NPAs too went up from 1.06 per cent in March 2016 quarter to 1.21 per cent in June quarter. Provisions fell to Rs 179.51 crore from Rs 305.31 crore in the year-ago period. Provisions were higher due to the ING Vysya merger in the June 2015 quarter, but the non-performing loans position has stabilised in the bank, said Gupta. However, according to Gupta, small and medium enterprises (SME) segment showed stress in the quarter.

The bank’s fresh slippages, or good loans turning bad in the quarter, were about Rs 200 crore for which the stress mostly came from the SME segment. Companies exposed to commodity cycles such as iron traders and jewellers were showing stress in the segment.

The bank’s advances grew 16.55 per cent, having seen healthy growth in the commercial vehicles and construction equipment segment. “The corporate loan segment is also showing improvement in loan demand,” Gupta said.

Kotak Mahindra and associates hold a significant stake in Business Standard Pvt Ltd

According to the bank management, the merger of ING Vysya was now complete and has resulted in good synergy in terms of cost and revenue.

“Post merger, most of the parameters are reasonably well in control and you will see it improving further in the coming quarters,” said Gupta.

“We are moving back to our erstwhile Kotak parameters,” Gupta added.

Kotak Mahindra and associates hold a significant stake in Business Standard Pvt Ltd