Kotak Mahindra Jumps to Record After 2Q Profit Beats Estimates

(Bloomberg) -- Shares in Kotak Mahindra Bank Ltd. jumped to a record after the nation’s fourth-largest private lender posted a smaller-than-expected drop in profit.

Net income in the second quarter fell 7% to 20.3 billion rupees ($270 million) from a year earlier after the bank set aside fewer provisions for bad loans, according to a statement Tuesday. Income from fees and services helped to offset a small rise in net interest income. 

The profit beat the average 18.6 billion rupees estimate from 13 analysts in a Bloomberg survey. 

Shares rose as much as 3.9% after the results were announced. On Monday, rival ICICI Bank surged almost 11% after it posted a record profit that was helped by strong growth in retail loans.

Kotak Mahindra Bank set aside 4.24 billion rupees for provisions in the September quarter, up from 3.3 billion rupees a year earlier, but lower than the 7.04 billion rupees it set aside in the previous three months. The lender’s gross bad loan ratio narrowed to 3.19% from 3.56% in the three months earlier. 

The lender, founded by the world’s richest banker, Uday Kotak, is bolstering a relatively safe retail loan book after slowing its overall credit growth over the past few years when India was gripped by a shadow lending crisis and then the global pandemic. The bank’s overall loans grew 14.7% from a year earlier.

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