Private sector lender Kotak Mahindra Bank on Monday reported a 36 per cent year-on-year (YoY) rise in consolidated net profit at Rs 2,589 crore for the March quarter of FY21. On a standalone basis, the bank’s net profit in the same period jumped 33 per cent YoY to Rs 1,682 crore due to a good rise in other income and a stable net interest income (NII).
The bank’s NII grew 8 per cent YoY in Q4FY21 to Rs 3,843 crore, while the net interest margin was at 4.39 per cent as against 4.72 per cent in the year-ago quarter. Other income of the lender went up by 31 per cent to Rs 1,949 crore compared to the same period a year ago.
Provision and contingencies went up to Rs 1,179 crore against Rs 1,047 crore in the year-ago period. It is holding Covid-related provisions to the tune of Rs 1,279 crore at the end of March 31. The bank, however, did not dip into its Covid provisions in the March quarter.
The bank said, post the Supreme Court’s judgment vacating its interim order on standstill on asset classification, it has retrospectively reversed income and consequently adjusted provisions and contingencies. Also, it has created a liability of Rs 110 crore towards estimated interest relief and has reduced the same from interest earned.
Total provisions held by the lender, which includes specific, standard, Covid-related, and others, stood at Rs 7,021 crore as of March 31.
The gross non-performing assets (GNPA) as a per cent of advances at the end of March quarter stood at 3.25 per cent, which is almost 100 basis points (bps) higher than last year, but 2 bps lower sequentially (over the proforma figure). Similarly, net NPAs of the lender stood at 1.21 per cent, up 50 bps from last year, but down 3 bps sequentially.
The bank said it implemented a restructuring of Rs 435 crore as per the regulator’s dispensation, which is 0.19 per cent of its net advances. The loan book increased by 1.8 per cent to Rs 2.23 trillion at the end of March 31, against Rs 2.19 trillion a year ago.
“We will fly through the clouds but fly at a pace that makes sense for us. We continue to believe that the most challenging part of the lending book is going to be towards the lower end, and Covid 2.0 increases that risk. Therefore, unsecured consumer retail, whether it is consumer loans, credit cards, micro-finance loans, will be at a much higher risk,” said Uday Kotak, MD & CEO, Kotak Mahindra Bank.
“So, consciously, we have dropped our unsecured retail book from 7.5 per cent to 5.8 per cent. On the other hand, if you look at housing finance, today, we are the lowest rate providers of home loans in India at 6.65 per cent. We have seen very significant growth in our home loan book in the six months. So, we are very open to lending but we also have an obligation to stakeholders, including our depositors. We are not scared of growing but we will grow on our terms and in segments we believe we can produce returns for the risk we take,” he added.
On succession planning, post the RBI’s directives on private bank CEOs tenure, Kotak said, the tenure expires on December 31, 2023. The board and the bank are fully committed to the long-term stakeholder value. And, the bank as an institution will do whatever it takes to ensure long-term stakeholder and shareholder value as it thinks about the future, he said.
Disclosure: Entities controlled by the Kotak family have a significant shareholding in Business Standard.