A Kotak Mahindra Bank Ltd. branch stands in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

Q1 Result: Kotak Mahindra Bank Profit Misses Estimates, Asset Quality Improves

Kotak Mahindra Bank Ltd.'s net profit missed estimates in the June-ended quarter despite a robust loan growth and asset quality remaining stable.

Net profit of the country’s second-largest lender by market capitalisation rose 12.3 percent over the year-ago period to Rs 1,025 crore in the three months to June, it said in an exchange filing. That’s lower than the Rs 1,213 crore consensus estimate of analysts tracked by Bloomberg.

Net interest income, or the core income of the lender, rose 15 percent to Rs 2,583 crore, lower than the estimated Rs 2,675 crore. It was aided by a 24 percent growth in its overall loan book.

“Loan growth may have picked up as the bank gains market share in both the consumer and corporate segments, with public-sector banks scaling back on lending due to asset quality woes and diminished capital strength,” a Bloomberg Intelligence report said.

Asset Quality Improves

The Uday Kotak-led bank’s asset quality improved during the quarter. Gross non-performing assets ratio contracted to 2.17 percent from 2.22 percent a quarter ago. The net NPA ratio also narrowed to 0.86 percent from 0.98 percent.

Q1 Result: Kotak Mahindra Bank Profit Misses Estimates, Asset Quality Improves

Provisions, however, jumped to Rs 469.6 crore from Rs 306.9 crore.

The lender’s stock fell as much as 2.1 percent to Rs 1,369 after the earnings were announced. It has risen 39.1 percent so far in 2018 compared with a 5.5 percent increase in the Nifty Bank Index.

Other Highlights

  • Net interest margin falls to 4.3 percent from 4.35 percent in the previous quarter.
  • The ratio of current and savings account deposits rose to 50.3 percent from 43.9 percent a year ago.
  • Average savings deposits grew 59 percent year-on-year to Rs 65,135 crore.
  • Average current account deposits rose 24 percent over the year-ago period to Rs 26,649 crore.
  • Capital adequacy ratio of the bank stood at 18.3 percent as of June.