Kotak Mahindra Bank's consolidated net rises 50% to Rs 3,892 cr in Q4FY22

The lender's net interest income increased 18% YoY to Rs 4,521 crore, aided by a loan growth of 21%

Kotak Mahindra Bank reported a 50 per cent year-on-year (YoY) jump in consolidated net profit to Rs 3,892 crore in the January-March quarter (Q4) of FY22, on better margins and robust performance of subsidiaries. 

The bank had posted a consolidated net profit of Rs 2,589 crore in the same period a year ago. On a full-year basis (FY22), the consolidated net profit was up 21 per cent to Rs 12,089 crore compared to the previous year.

Uday Kotak, managing director (MD) and chief executive officer (CEO) of the bank, said, consolidated profits are broad-based. He added, “Profits coming from non-banking entities are very significant. They are not dependent disproportionately only on the bank. About 30 per cent of the consolidated profit comes from subsidiaries.”

On a standalone basis, which represents the banking operations, the lender’s net profit was up 65 per cent YoY to Rs 2,767 crore in Q4 of FY22, beating Street estimates, as it wrote back Covid-19 provisions amounting to Rs 453 crore in the quarter.

Analysts polled by Bloomberg had estimated a net profit of Rs 2,147 crore for the bank. In the year-ago period, the lender had earned a net profit of Rs 1,682 crore. For FY22, standalone net profit was up 23 per cent to Rs 8,573 crore from Rs 6,965 crore in FY21.

Net interest income (NII), the difference between interest earned and expended, increased by 18 per cent YoY to Rs 4,521 crore in Q4 of FY22. Net interest margin, a measure of profitability, stood at 4.78 per cent in Q4, up from 4.39 per cent in the year-ago period.

Fees and services income was up 23 per cent YoY to Rs 1,697 crore in Q4.

Referring to the impact of hike in repo rate, Kotak said, as the RBI action gets factored into deposit rates, MCLR-linked loans will get repriced (rise).

Also, market benchmark-linked loans (for retail and wholesale side) that are mainly linked to repo rate would also get repriced.

A large portion of Kotak Mahindra Bank’s loan book is benchmarked to repo followed by MCLR. Banks will be able to pass on the impact appropriately, he added.

The bank wrote back Covid provisions to the tune of Rs 453 crore in Q4 of FY22, and Rs 732 crore for the full year (FY22). The bank had reversed Rs 279 crore Covid-19 provisions in the December 2021 quarter.

Asset quality of the lender improved with gross non-performing asset (gross NPA) ratio dropping 37-basis points sequentially to 2.34 per cent. Net NPA ratio dropped 15-basis points to 0.64 per cent during the same period.

Loan book of the bank grew 21 per cent YoY to Rs 2.71 trillion, driven by growth in home loan, consumer banking, credit card, and micro finance segments.

Deposits of the lender grew 11 per cent YoY to Rs 3.11 trillion, with CASA (current account and savings account) ratio on March 31, 2022, at 60.7 per cent.

Entities controlled by the Kotak family have a significant shareholding in Business Standard.