Kotak Mahindra Bank declines as Q3 earnings disappoint

Kotak Mahindra Bank fell 2.79% to Rs 707.85 at 13:50 IST on BSE after the bank reported weak Q3 December 2013 results.

Meanwhile, the BSE Sensex was up 24.40 points, or 0.12%, to 21,229.45.

On BSE, so far 82,000 shares were traded in the counter, compared with an average volume of 46,830 shares in the past one quarter.

The stock hit a high of Rs 730.55 and a low of Rs 705.50 so far during the day. The stock hit a record high of Rs 804 on 30 May 2013. The stock hit a 52-week low of Rs 588 on 28 August 2013.

The stock had underperformed the market over the past one month till 20 January 2014, fell 0.49% compared with the Sensex's 0.59% rise. The scrip had, however, outperformed the market in past one quarter, rising 3.98% as against Sensex's 1.54% rise.

The large-cap private sector bank has an equity capital of Rs 384.80 crore. Face value per share is Rs 5.

Kotak Mahindra Bank's net profit fell 6% to Rs 339.98 crore on 3.86% increase in total income to Rs 2492.01 crore in Q3 December 2013 over Q3 December 2012.

The bank's ratio of net non-performing assets to net advances stood at 1.10% as on 31 December 2013, compared with 0.96% as on 30 September 2013 and 0.64% as on 31 December 2012.

The bank's ratio of gross non-performing assets (NPA) to gross advances stood at 2.01% as on 31 December 2013, compared with 1.97% as on 30 September 2013 and 1.46% as on 31 December 2012.

Provisions and contingencies rose 64.64% to Rs 69.74 crore in 31 December 2013 over 31 December 2012.

The bank's Capital Adequacy Ratio (CAR) as per Basel III norms stood at 17.43% as on 31 December 2013, compared with 18.15% as on 30 September 2013.

Kotak Mahindra Bank's net interest income (NII) rose 11% to Rs 913 crore in Q3 December 2013 over Q3 December 2012.

Advances as on 31 December 2013 were up 6% to Rs 53149 crore. The bank is cautiously slowing down on CECV lending. Without considering CECV, the growth in advances was 12% in Q3 December 2013 over Q3 December 2012.

Restructured loans considered standard as on 31 December 2013 Rs 42 crore - 0.08% of net advances.

Savings deposits as on 31 December 2013 grew by 38% to Rs 9106 crore from Rs 6616 crore as on 31 December 2012. Current Account, Savings Account (CASA) ratio was 30%.

RBI vide circular dated 23 August 2013 on "Investment portfolio of banks - Classification, Valuation and Provisioning", as a one-time measure permitted banks to transfer SLR securities from Available For Sale (AFS)/Held For Trading (HFT) category to Held To Maturity (HTM) category at valuation rates prevailing on 15 July, 2013, provided the transfer happened before 30th September, 2013.

Kotak Mahindra Bank has not transferred any SLR security from AFS/HFT category to HTM category. The bank's SLR securities in HTM category as at 31 December, 2013 were 11.70% of net demand and time liabilities (NDTL). As permitted under the same circular, the Bank has opted to distribute the net depreciation on the AFS and HFT portfolios in equal installments during the financial year 2013-2014.

Accordingly, of the net depreciation of Rs 196.95 crore as at 31 December 2013, the bank has amortised Rs 43.43 crore and Rs 131.30 crore in the Profit and Loss Account for the quarter and nine months ended 31 December 2013 respectively.

The duration of bank's investment book as on 31 December 2013 is 2.06.

On a consolidated basis, Kotak Mahindra Bank's net profit rose 2.43% to Rs 591.25 crore on 6.43% increase in total income to Rs 4,424.50 crore in Q3 December 2013 over Q3 December 2012.

Consolidated advances rose 6% to Rs 71041 crore as on 31 December 2013 from Rs 67021 crore as on 31 December 2012. Without considering CECV, the growth in advances was 10%

Consolidated net interest margin (NIM) stood at 4.9% in Q3 December 2013 compared with 4.6% in Q3 December 2012.

Consolidated capital adequacy ratio (CAR) including profits as per Basel III as on 31 December 2013 is 19.4%. Tier 1 ratio is 18.4%.

Total assets managed/advised by the group are Rs 59909 crore in 31 December 2013 compared with Rs 56,484 crore in 31 December 2012.

Kotak Mahindra group is one of India's leading financial services conglomerates. As on 31 December 2013, the bank had 533 full-fledged branches (408 branches as on 31 December 2012) across 315 locations and 1,036 ATMs.

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