Q1 Results: Kotak Mahindra Bank’s Profit Rises But Misses Estimates
Net profit rose 33 percent year-on-year to Rs 1,360 crore in the first quarter.
Kotak Mahindra Bank Ltd.’s profit rose in the quarter ended June but missed estimates.
Net profit rose 33 percent year-on-year to Rs 1,360 crore in the April-June period, the private lender said in an exchange filing. That compares with the Rs 1,434-crore consensus estimate of analysts tracked by Bloomberg.
Net interest income, or core income, rose 23 percent over last year to Rs 3,173 crore—in line with the Rs 3,168-crore estimate. The bank’s net interest margin, too, expanded to 4.49 percent from 4.46 percent in the preceding quarter.
The lender’s asset quality remained stable during the quarter. The gross non-performing assets ratio stood at 2.19 percent compared to 2.14 percent in the quarter ended March. Its net NPA ratio dipped to 0.73 percent from 0.75 percent in the three-month period.
Still, provisions rose 85 percent on a quarterly basis to Rs 317 crore.
Slippages across sectors were at Rs 750 crore as of June compared with Rs 900 crore as of March, Jaimin Bhatt, chief financial officer at the bank, said during a post-earnings press meet. “MSMEs had some breathing time and a deferral period which in this quarter accounted for Rs 100 crore worth of slippages,” he said. “The slippages in the MSME loans are fully provided for.”
The bank also said its corporate lending has been sluggish and overall demand has been muted. Corporate lending, according to the filing, rose 7.5 percent year-on-year to Rs 81,418 crore. The bank expects growth to come mainly from consumer lending.
Besides, the automobile segment is “not looking good right now”, according to Joint Managing Director Dipak Gupta. The bank will have to “wait and watch the slowdown” and hopes the “excitement in smaller towns for buying vehicles comes back”, he said. The auto loan customers are not distressed, but there will be slower uptake in lending, Gupta said, adding the slowdown in auto demand, however, won’t affect repayments.
Key Earnings Highlights:
- The lender’s loan book grew 18 percent on a yearly basis to Rs 2.08 lakh crore as of June.
- Its CASA ratio stood at 50.7 percent from 50.3 percent in the year-ago period.
Highlights From The Management:
- Outlook remains challenging but there are pockets that are doing well.
- Agriculture lending is mostly secured, do not see significant stress.
- We have been cautious of the slowdown in the past nine months. The risk-management practices have to be strong.
- Unsecured lending has been on an upward trend but there are no real concerns.
Shares of Kotak Mahindra Bank closed 3.08 percent lower ahead of the results announcement. That compares with a 1.63 percent drop in the NSE Nifty Bank Index.