Kotak Mahindra Bank consolidated Q1 net up 17% to Rs 15.74 bn

Total income up 15% YoY to Rs 99 bn; Gross NPA at 1.93% for the quarter, against 2.24% a year ago and 1.95% in the immediately preceding quarter ended March 2018

Private lender Kotak Mahindra Bank reported 17 per cent rise in its fiRs t quarter (Q1) consolidated net profit on account of higher interest and fee income. The asset quality of the bank’s loan book also improved during the quarter.

Profit after tax at the consolidated level rose to Rs 15.74 billion for the quarter ended June 2018, from Rs 13.47 billion in the year-ago period.

Total consolidated income rose 15 per cent year-on-year (YoY) to Rs 99 billion.

At the standalone level, the bank reported a 12.3 per cent rise in net profit to Rs 10.25 billion, against Rs 9.13 billion in the year-ago quarter.

Gross non-performing assets (NPAs), as a percentage of total advances on a consolidated basis, fell to 1.93 per cent for the quarter, against 2.24 per cent in the year-ago quarter and 1.95 per cent in the previous March quarter.

Net NPA stood at 0.77 per cent for the present quarter, against 1.07 per cent in the year-ago quarter and 0.86 per cent in the March quarter.

Net interest margin for June 2018 quarter stood at 4.2 per cent, against 4.3 per cent in the previous March quarter and 4.5 per cent in the year-ago quarter. 

The bank expects strong loan book growth going forward. “We expect a loan growth in 20 per cent range and margins to stabilise in the 4.1–4.3 per cent range,” said Jaimin Bhatt, president and chief financial officer, Kotak Mahindra Bank.

At the standalone level, its provisioning more than doubled from Rs 2.04 billion to Rs 4.70 billion on account of worries in the small and medium enterprise (SME) segment and also mark-to-market (MTM) hit on its gilt portfolio. 

“We are seeing some concerns on micro level in SMEs. These seem to be early signs that there is pain coming in,” said Dipak Gupta, joint managing director, Kotak Mahindra Bank. 

Gupta also said the trading community was seeing stress after the implementation of the goods and services tax and demonetisation. 

“We have consciously slowed down the SME book and it currently stands at 10 per cent of the overall book,” he added.

Kotak Mahindra Bank provided for over Rs 2 billion in its investment portfolio in the June 2018 quarter. 

“Though the Reserve Bank of India allowed dispensation of MTM losses over four quarteRs , we have taken the entire impact in this quarter itself,” Gupta said. 

Consolidated capital adequacy ratio stood at 17.76 per cent in Q1 from 19.21 per cent a year ago.

For the standalone bank, average savings deposits grew by 59 per cent to Rs 651 billion, while average current account deposits were up 24 per cent to Rs 266 billion. 

As a result, the ratio of current and savings accounts, which are low cost sources of funds, to total deposits grew from 43.9 per cent a year ago to 50.3 per cent in June 2018.

The bank’s stock closed at Rs 1,350.25 on the BSE, down by 3.69 from previous close. 

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