A man exits a Kotak Mahindra Bank Ltd. branch in Mumbai. (Photographer: Adeel Halim/Bloomberg)

Q4 Results: Kotak Mahindra Bank’s Profit Up 25% On Strong Advances

Kotak Mahindra Bank Ltd.’s profit grew at its fastest pace in at least eight quarters, driven by strong loan growth.

Net profit rose 25 percent year-on-year to Rs 1,408 crore in the March quarter, according to the bank’s exchange filing. That’s in line with the Rs 1,394-crore consensus estimate of analysts tracked by Bloomberg.

Net interest income, or core income of the lender, rose 18 percent to Rs 3,048 crore— marginally lower than the Rs 3,079-crore estimate. Net interest margin also expanded to 4.48 percent from 4.33 percent in the corresponding quarter.

The bank’s profit was aided by a 21 percent rise in total advances to Rs 2,05,695 crore.

“The bank was building in a 22 percent loan growth but the 21 percent growth is not very disappointing because the margin has also grown and the overall bottom line and control over asset quality is there,” said Kajal Gandhi, banking analyst at ICICI Direct. “Considering that, it doesn’t appear to be a miss.”

Asset Quality Stable

Gross non-performing assets ratio of the Uday Kotak-led bank rose to 2.14 percent from 2.07 percent in the December-ended quarter. Net bad loans, too, expanded to 0.75 percent from 0.71 percent. The rise, however, was in line with expectations.

Provisions for bad loans fell 44 percent year-on-year to Rs 171 crore. The bank, however, had a writeback of Rs 32 crore in the preceding quarter.

Other Highlights

  • Average savings deposits grew 25 percent.
  • Average current account deposits grew 14 percent.
  • Other income rose 10.3 percent year-on-year to Rs 1,270 crore.
  • CASA ratio stood at 52.5 percent as on March 31, 2019 compared to 50.8 percent a year ago.

Shares of the private sector lender declined 2 percent to Rs 1,351 apiece after the announcement of the results. The stock has gained 10.41 percent so far this year compared to a 9 percent rise in the NSE Nifty Bank Index.

Q4 Results: Kotak Mahindra Bank’s Profit Up 25% On Strong Advances