KMBL drops after reporting weak Q1 results

Kotak Mahindra Bank declined 2.95% to Rs 695 at 9:25 IST on BSE after net profit fell 55.84% to Rs 189.78 crore on 70.65% growth in total income to Rs 4583.86 crore in Q1 June 2015 over Q1 June 2014.

The bank announced the first quarter results after market hours yesterday, 30 July 2015.

Meanwhile, the BSE Sensex was up 235.08 points, or 0.85%, to 27,940.43.

On BSE, so far 29,290 shares were traded in the counter, compared with an average volume of 1.25 lakh shares in the past one quarter.

Shares of private bank hit a high of Rs 700 and a low of Rs 692 so far during the day. The stock hit a record high of Rs 744.45 on 21 July 2015. The stock hit a 52-week low of Rs 459.53 on 8 August 2014.

Kotak Mahindra Bank (KMBL) said the results for Q1 June 2015 include operations of erstwhile ING Vysya Bank which was merged with KMBL with effect from 1 April 2015. Hence, the results for Q1 June 2015 are not comparable with that of the corresponding period of the previous year.

KMBL said that the Q1 June 2015 results were hit adversely by significant provisions on merger of ING Vysya Bank with KMBL. KMBL made provisions of Rs 339 crore for retiral benefits of employees of erstwhile ING Vysya Bank amounting to Rs 339 crore. The bottom line during the quarter was also impacted by provisions and contingencies of Rs 305 crore of which a significant portion is from erstwhile ING Vysya Bank. KMBL also incurred integration cost of Rs 63 crore in Q1 June 2015, including stamp duty, related to the merger. KMBL made payment of additional interest on savings accounts of erstwhile ING Vysya Bank amounting to Rs 30 crore in view of the higher rate of 6% (for balance above Rs 1 lakh) offered to the customers as against 4% offered by ING Vysya Bank.

KMBL said in a statement that the management believes the merger benefits will flow in due course from both, revenue synergies as well as cost efficiencies, resulting from significant geographical and product complementarities, fuller customer segment coverage, economies of scale and improved productivity and efficiency.

On absolute basis, KMBL's gross non-performing assets (NPAs) stood at Rs 2421.77 crore as on 30 June 2015, compared with Rs 1237.23 crore as on 31 March 2015 and Rs 1079.02 crore as on 30 June 2014. The ratio of gross NPAs to gross advances stood at 2.31% as on 30 June 2015 as against 1.85% as on 31 March 2015 and 1.88% as on 30 June 2014. The ratio of net NPAs to net advances stood at 1.04% as on 30 June 2015 as against 0.92% as on 31 March 2015 and 0.98% as on 30 June 2014.

The bank's Capital Adequacy Ratio (CAR) as per Basel III norms stood at 16.36% as on 30 June 2015 as against 17.17% as on 31 March 2015 and 18.5% as on 30 June 2014.

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