Kotak Mahindra net up 37.6%

The lender's board approved bonus issue of one share for every share held; net interest income rises 16%

Private sector lender Kotak Mahindra Bank reported 37.6 per cent growth in consolidated net profit for the quarter ended March at Rs 912.60 crore, compared with Rs 663.31 crore in the corresponding quarter last year. This was primarily due to a 52 per cent rise in other income at Rs 2,655 crore.

On a standalone basis, the net profit rose 29.5 per cent to Rs 527.14 crore, owing to 96 per cent growth in non-interest income. A Bloomberg poll of analysts had estimated the standalone net profit at Rs 498 crore.

The bank had incurred a one-time merger related expense of Rs 54 crore for the March quarter, excluding which the profits could have been higher. In November 2014, Kotak Mahindra Bank had acquired ING Vysya Bank in an all-share deal.

Non-interest income includes fees, commission, earnings from foreign exchange transaction and credit card fees. It stood at Rs 668.14 crore during the March quarter.

As of March-end, advances were up 25 per cent year-on-year at Rs 66,161 crore.

Uday Kotak, executive vice-chairman and managing director of Kotak Mahindra Bank, said corporate advances had grown at a faster pace than retail advances. “The area where we have seen a slowdown is the tractor financing side. In the current year, we are marginally negative in commercial vehicles. In construction equipment, we are seeing there has been a bottoming out in commercial vehicles, with reference to heavy commercial vehicles. Light commercial vehicle sales still involve some challenges,” he said.

The bank’s gross non-performing assets stood at 1.85 per cent of gross advances, compared with 1.98 per cent in the year-ago period. The net non-performing asset ratio fell from 1.08 per cent to 0.92 per cent.

At the end of March, the bank’s capital adequacy ratio stood at 17.2 per cent.

Net interest income rose 16 per cent to Rs 1,123 crore, while consolidated net interest margin, a key indicator of profitability, stood at 4.93 per cent for FY15, compared with 4.97 per cent in FY14. However, the NIM for the bank is likely to come down on account of merger with ING Vysya. This is because for nine months in FY15, ING’s NIMs were in the range of 3.46 per cent, lower than that of Kotak Mahindra Bank.

“I would guide that the NIMs would be around 4-4.5 in FY16. However, it is early stage and we will be able to give you a clearer picture at the end of the first quarter,” added Kotak.

After 10 years, the bank has approved a bonus issue of one equity share for every share held in the bank. “The bonus issue is subject to shareholder approval later this year. The idea behind this is we want to welcome the erstwhile ING Vysya Bank shareholders into Kotak’s fold,” Kotak said.

The board has also recommended a dividend of Rs 0.90 for every share of face value Rs 5.

Kotak Mahindra and associates are significant shareholders in Business Standard Private Limited