Kotak Mahindra Bank Q3 net profit up 34% to Rs 1,267 crore

Total income rose to Rs 7,670 cr during the quarter, from Rs 6,950 cr a year ago

Private sector lender Kotak Mahindra Bank’s consolidated net profit increased by 34% to Rs 1,267 crore for the October-December 2016 quarter from Rs 945 crore a year ago on the back of higher net interest income.

Net interest income, the difference between interest earned and interest expended, increased by 15.9% to Rs 2,747 crore. Other income that includes fees, commission etc also increased to Rs 2,004 crore as compared to Rs 1,804.7 crore in the same quarter last year.

Net interest margin, a key indicator of the bank's profitability expanded to 4.49% from 4.34% in the corresponding quarter last year. The management explained that as a result of demonetisation, low cost deposit increased which aided NIM growth. The bank saw a 45% increase in its savings account growth and a 24% increase in its current account growth. Also as a result of demonetisation, the bank saw an increase in digital transactions both in volume and value terms.

Standalone net profit rose by 39% in the October-December quarter to Rs 880 crore.

Consolidated net interest margin, a key indicator of the bank’s profitability, improved by 7 basis points (bps) year-on-year and 2 bps sequentially to 4.48% in Q2 FY17.

Loan growth slowed due to demonetisation. “Certain segments like agri, SME, commercial vehicles etc were impacted due to demonetisation. Some of these sectors had started picking up in October but from November the growth has come off. The rural segment has been more affected than the urban areas," said Dipak Gupta, joint managing director, Kotak Mahindra Bank.

Consolidated advances increased 12% to Rs 157,801 crore as on December 31, 2016 from Rs 141,136 crore in December 2015.  

The bank saw a slight uptick in bad loans at the standalone level with the percentage of gross non-performing assets (NPA) increasing to 2.42% from 2.30% in the corresponding quarter last year. In the same period net NPA also increased to 1.07% from 0.96%.

At the end of the December quarter, restructured loans considered standard were down to 0.11% of net advances to Rs 146 crore. The management added that with the integration process of the ING Vysya Bank merger completed, the benefits on the retail side should start kicking in from the next quarter.

The bank remains well-capitalised with a consolidated capital adequacy ratio of 18% (including unaudited profits) and tier-1 ratio at 17.2%.
 

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