Kotak profit falls 6% on rising bad loans, treasury losses

Private sector lender Kotak Mahindra Bank today reported a 6 per cent fall in standalone December quarter profit at Rs 340 crore on account of mark-to-market losses and higher provisioning, which whittled down the increase in net interest margins.
"We have been very cautious on growth," joint managing director Dipak Gupta told reporters, adding that in businesses where the bank is more comfortable, it has grown more than normal, while in segments where it is not comfortable, such as construction equipment and commercial vehicles, it was down 26 per cent.
"Despite this, overall advances grew 6 per cent," Gupta said.

The bank's net interest margin (NIM), the key gauge of profitability, was 4.8 per cent compared with 4.5 per cent in the same quarter last year.
"Today, 50 per cent of the bank's book is in held-to-maturity (HTM) category, leading to a loss of Rs 197 crore, forcing us to make an additional provisioning," Gupta said.
Accordingly, provisioning rose to Rs 69.74 crore as against Rs 42.36 crore in the year-ago quarter.

The bank's SLR securities in HTM category at the end of the quarter was 11.7 per cent of net demand and time liabilities (NDTL), Gupta added.
Out of the net depreciation of Rs 196.95 crore as on December 31, the bank amortised net depreciation on held for trade/available for sale portfolio aggregating to Rs 131.30 crore (Rs 43.43 crore for Q3).

On a consolidated basis, net profit marginally rose 2.4 per cent to Rs 591.25 crore from Rs 577.21 crore last year.
Standalone net interest income for the third quarter was up 11 per cent to Rs 913 crore from Rs 823 crore a year earlier.