Kotak Mahindra Bank Q3 Results: Net Profit Rises 16% As Core Income Grows
Customers standing in queue outside Kotak Mahindra Bank. (Photo: BloombergQuint) 

Kotak Mahindra Bank Q3 Results: Net Profit Rises 16% As Core Income Grows

Private lender Kotak Mahindra Bank Ltd.'s third-quarter profit rose as its core income grew.

Kotak Mahindra Bank Ltd.'s profit rose 16% over a year earlier to Rs 1,853 crore in the three months ended December, according to its filing. Analysts polled by Bloomberg had expected a profit of Rs 1,701 crore.

Net interest income, or core income, rose 16.8% year-on-year to Rs 4,007 crore against the estimated Rs 3,497 crore.

Asset Quality

The bank's gross non-performing asset ratio stood at 2.26% as of December compared with 2.55% in the September quarter.

Proforma gross NPA, including accounts enjoying asset qualification benefit due to the Supreme Court’s interim order in the compound interest case, stood at 3.27%, up from 2.7% in the second quarter.

“Of this increase (in proforma NPA numbers), a disproportionate portion is in unsecured consumer retail which has flown through to +90 days in Q3FY21,” the bank said in its analyst presentation.

  • Proforma net NPA ratio stood at 1.24% versus 0.74% in the preceding quarter.

  • The bank approved one-time restructuring for accounts representing 0.28% of its net advances.

  • Provision coverage, excluding Covid-related provisions, stood at 78.4% as of Dec. 31 compared with 75.6% as of Sept. 30.

  • Outstanding Covid-related provisions as of Dec. 31 stood at Rs 1,279 crore.

According to Jaimin Bhatt, group president and group chief financial officer, Kotak Mahindra Bank, the recoveries in the proforma accounts have been slow, which is why the bank made higher provisions against these accounts.

Advances And Deposits

Kotak Mahindra Bank’s total advances rose 4.5% quarter-on-quarter to Rs 2.14 lakh crore as of December. But over a year earlier, they contracted 1.23%.

  • In the third quarter, home loans and loans against property constituted 22% of the book.

  • Corporate banking contributed 26%.

  • Unsecured loans, including credit cards, personal loans, business loans and consumer durables formed 5% of the total loan book.

Total exposure to non-bank lenders stood at Rs 14,169 crore, including Rs 6,174 crore towards housing finance companies. Kotak Mahindra Bank’s disbursals under the government’s emergency credit-line guarantee scheme stood at Rs 9,400 crore as of December, which rose to Rs 9,700 crore in January, the bank said.

“We feel comfortable enough to move the foot to acceleration in the secured retail lending space. We are also looking at good lending opportunities in the corporate and small business space," said Dipak Gupta, joint managing director, Kotak Mahindra Bank. "We will continue to remain slow in the retail unsecured segment.”

The lender's outstanding deposits stood at Rs 2.65 lakh crore at the end of the third quarter, up 1.4% sequentially.

  • Current account savings account ratio in the deposits stood at 58.9% as of December compared with 53.7% a year ago.

  • Term deposits stood at Rs 1.09 lakh crore.

As on Dec. 31, Kotak Mahindra Bank’s capital adequacy ratio stood at 23.62%, with tier-1 capital contributing 23%. The bank will evaluate acquisition opportunities in financial services but not at the time, Gupta said.

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