Kotak Mahindra Bank Q3 results: Consolidated net up 10% at Rs 4,701 crore

Net interest income grew by 10 per cent Y-o-Y to Rs 7,196 crore, while fees and services for Q3FY25 also grew 10 per cent to 2,362 crore

Private sector lender Kotak Mahindra Bank reported a consolidated net profit of Rs 4,701 crore during the quarter ended December, up 10 per cent year-on-year (Y-o-Y).

 

Kotak Securities net profit grew 46 per cent y-o-y to Rs 448 crore while Kotak Asset Management & Trustee Company’s net profit increased 65 per cent to Rs 240 crore.

 

On a standalone basis, the lender’s net profit for the period under review went up to Rs 3,305 crore from Rs 3,005 crore during the previous year, an increase of 10 per cent driven by both core and non-core income.

 

“In terms of the macroeconomic environment there is undoubtedly heighted volatility and evidence of a potential slowdown. And the credit strain that we actually called out right in the first quarter of last year continued. We are seeing that in various degrees across credit card, personal loan, and microfinance portfolio,” said Ashok Vaswani, MD & CEO, Kotak Mahindra Bank during post earnings media interaction.

 

“On the flipside the buoyancy in the capital market has been a tailwind for us and as evident in our investment banking business, asset management business and Kotak Securities,” Vaswani said.

 

Net interest income – the difference between interest earned and interest expended – grew by 10 per cent Y-o-Y to Rs 7,196 crore, while fees and services for Q3FY25 also grew 10 per cent to 2,362 crore. Other income grew by 14 per cent to Rs 2,623 crore.

 

Net interest margin (NIM) declined to 4.93 per cent for Q3FY25, from 5.22 per cent during the same period of the previous financial year.

 

Loans increased 16 per cent Y-o-Y to Rs 4.33 trillion as on December 31, and unsecured retail advances (including retail microcredit) as a percentage of net advances stood at 10.5 per cent as on December 31, 2024.

 

The retail microcredit book of the bank shrunk to Rs 8,225 crore from Rs 8,509 crore from the year ago period. Sequentially, the book fell 16 per cent to Rs 9,776 crore. Average total deposits grew to Rs 4.58 trillion, up 15 per cent year-on-year.

 

The share of low cost deposits, that is, the current and savings account deposits, was 42.3 per cent as on December 31, as compared to 47.7 per cent in the year ago period. Average current account deposit grew by 12 per cent Y-o-Y, while savings account deposits growth was 1 per cent.

 

The credit deposit ratio fell marginally to 87.4 per cent from 88 per cent. The CD ratio at September end was 86.6 per cent.

 

Gross non-performing assets (NPA) as a percentage of gross advances fell to 1.5 per cent from 1.73 per cent from the year ago period, while the net NPA ratio increased to 0.41 per cent from 0.34 per cent in Q3 of FY24 but fell sequentially from 0.43% reported in the second quarter.

 

In absolute terms, gross NPA was 6,266 crore as on December 31 as compared to Rs 6,302 crore a year ago.

 

Fresh slippages during the quarter was Rs 1657 crore, rising from Rs 1177 crore in the year ago period. However, it fell from Rs 1875 crore reported in the previous quarter (Q2).

 

Devang Gheewalla, group chief financial officer of the bank said slippage declined sequentially mainly due to tractor finance business and personal loan business.

 

On asset quality issues, Vaswani said personal loans are already seeing improvement. “Credit cards are kind of plateaued, hopefully next quarter or in two quarter we will see improvement in credit cards.

 

So far as microfinance loans are concerned, we continue to see a rise in delinquencies but there is a de-acceleration of the growth in delinquencies,” Vaswani said.

 

The bank expects a turnaround in the microloan asset quality from the next quarter.

 

“Microfinance should plateau if not in the current quarter, potentially in the next quarter. On an overall basis, you will see a downward trend starting in the Q1 of next fiscal year,” Vaswani added.

 

Gheewalla said the retail micro loan book is not very significant which is around Rs 8,000 crore while the overall loan book is over Rs 4 trillion.

 

Total provision for the quarter was Rs 6,634 crore as compared to Rs 6,963 crore in the year ago period.

 

Capital Adequacy Ratio of the bank, as per Basel III norms, as on December 31, 2024 was 22.8 per cent and CET1 ratio 21.7 per cent, including unaudited profits.

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