With total income growing at a faster clip than total expenses, Kotak Mahindra Bank reported a 23 per cent increase in first quarter standalone net profit.

The private sector bank reported a net profit of ₹913 crore in the reporting quarter (Q1) ended June 30 as against ₹742 crore in the year-ago quarter.

In Q1, total income, comprising interest earned and other income, grew about 9 per cent year-on-year (y-o-y) to ₹5,563 crore. Total expenses inched up about 4 per cent to ₹3,967 crore.

Net interest income — the difference between interest earned and interest expended — rose 17 per cent ₹2,246 crore (₹1,919 crore in the year-ago quarter).

Other income rose 24 per cent to ₹907 crore (₹733 crore).

Net interest margin (net interest income divided by average interest-earning assets) edged up to 4.5 per cent (4.4 per cent).

Advances as on June 30 were up 18 per cent to ₹1,42,359 crore (₹1,20,765 crore as on June 30, 2016).

Jaimin Bhat, Group CFO, said there was slowdown in the business banking (catering to trade and financial requirements of small and medium businesses) segment, possibly on account of demonetisation. He said this segment is expected to recover, going forward. As on June-end 2017, deposits increased 17 per cent y-o-y to ₹1,63,518 crore (₹1,40,028 crore as on June-end 2016). Low-cost current account, savings account (CASA) deposits stood at 43.9 per cent (37.4 per cent as on June-end 2016).

Gross non-performing assets as a percentage of gross advances inched up to 2.58 per cent as of June-end 2017 from 2.50 per cent y-o-y.

Dipak Gupta, Joint Managing Director, said the bank has total exposure of ₹236 crore to four of the 12 accounts identified by the RBI for insolvency proceedings. He underscored that the four accounts were inherited from ING Vysya Bank at the time of merger on April 1, 2015.

“Provision for these four accounts is well in excess of the RBI stipulation,” he added. Post-provisioning, the net exposure is only ₹46 crore.

Provisions (other than tax) and contingencies were up 13.5 per cent at ₹204 crore. This includes provisions towards advances and investments. On the nearly 59 per cent jump in investment credit substitutes to ₹9,370 crore as of June-end 2017, Gupta explained that in the last six to nine months most of the better-rated corporates have moved from the loan market to the bond market for their resource requirements.

Consolidated results Kotak Mahindra Bank reported a 26 per cent increase in first quarter consolidated net profit at ₹1,347 crore (₹1,067 crore in the year-ago quarter).

Consolidated net profit also includes profit contribution from subsidiaries: Kotak Mahindra Prime ₹132 crore (₹120 crore in the year-ago quarter); Kotak Securities ₹125 crore (₹60 crore); Kotak Mahindra Old Mutual Life Insurance ₹103 crore (₹71 crore); and Kotak Mahindra Investments ₹45 crore (₹40 crore).

Shares of Kotak Mahindra Bank closed at ₹980.40 apiece, down 1.44 per cent over the previous close on the BSE.

Related Topics
comment COMMENT NOW