Q2 Results: Kotak Mahindra Bank’s Profit Meets Estimates Even As Asset Quality Weakens

Kotak Mahindra Bank Ltd.’s quarterly profit rose, meeting analyst estimates, even as its asset quality weakened.

Net profit rose 51 percent year-on-year to Rs 1,724 crore in the quarter ended September, according to the billionaire Uday Kotak-led private lender’s exchange filing. That compares with the Rs 1,709.8-crore consensus estimate of analysts tracked by Bloomberg. The bank’s profit and revenue were aided by a 15 percent rise in advances.

Net interest income, or core income, of the bank rose 25 percent over the last year to Rs 3,350 crore in the three-month period—against the estimated Rs 3,284 crore.

The bank’s gross non-performing assets ratio increased to 2.32 percent from 2.19 percent in the quarter ended June. Net bad loans, too, rose to 0.85 percent sequentially from 0.73 percent.

“Overall, the quality banks are really showing a lot of resilience,” Ajay Bagga, an independent market expert, said, adding Kotak Mahindra Bank, along with HDFC Bank, is good at gauging the demand. A decline in credit growth, he said, is more of “conservatism” due to a slowdown in commercial vehicle sector and it should not be “fussed about”, he told BloombergQuint.

Other Highlights:

• Net interest margin expanded to 4.61 percent from 4.49 percent in the previous quarter.
• Provisions jumped to Rs 408 crore from Rs 317 crore in the quarter ended June.
• CASA ratio stood at 53.6 percent against 50.7 percent in the April-June period.

Shares of the private lender pared the day’s losses to trade flat at Rs 1,616.60 apiece after the earnings announcement. That compares with a 0.41 percent drop in the Nifty 50 Index.