 "Kotak Mahindra Bank Q4 result: Consolidated PAT up 17% to Rs 5,337.2 cr")
This report has been updated
Private sector lender Kotak Mahindra Bank reported a 16.88 per cent year-on-year (Y-o-Y) increase in its consolidated net profit to Rs 5,337.2 crore during the Jan-March quarter (Q4) as compared to Rs 4,566.39 crore during the same period of the previous year.
On a standalone basis, which represents the banking operations, the lender’s net profit was Rs 4,133.3 crore, up 18.24 per cent y-o-y on the back of healthy loan growth and strong rise in fee income.
Net interest income – the difference between interest earned and interest expended – grew by 13 per cent year-on-year to Rs 6,909 crore while fee income increased 28 per cent to Rs 2,467 crore during the quarter under review.
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For the full year, standalone net profit increased 26 per cent to Rs 13,782 crore. Operating costs increased to Rs 16,679 crore in FY24 from Rs 13,787 crore in FY23. Technology expenses were 10 per cent of total operating cost in FY24, the bank said.
“We have been stepping up our IT spending in the last 2 years and ramping it up quite aggressively. We have a great landscape and many products and we have to spend across these businesses,” said Ashok Vaswani, Managing Director & Chief Executive Officer, Kotak Mahindra Bank in a post result media interaction.
On April 24th, the Reserve Bank of India (RBI) had asked the lender to stop onboarding new customers through its online and mobile banking channels and restricted it from issuing fresh credit cards. According to the regulator, the bank had failed to plug gaps in its information technology (IT) systems necessitating the action.
Shanti Ekambaram, Deputy MD, said that the bank will undertake re-prioritisation within the IT expenses towards reaching the standards. While there will be some reprioritisation, there will also be more investment. Also, in the backdrop of the restriction on the bank, she noted that it will focus more on the existing customers and on cross-selling of products.
The bank reported a loan growth of 20 per cent to Rs 3.91 trillion, as of March 31, 2024.
“Customer Assets, which comprises Advances and Credit Substitutes, increased by 20 per cent Y-o-Y to Rs 423,324 crore as at March 31, 2024 from Rs 352,652 crore as at March 31, 2023,” the bank said.
Unsecured retail advances (including Retail Micro Finance) as a percentage of net advances stood at 11.8 per cent as at March 31, 2024 as compared to 10.0 per cent as at March 31, 2023.
“As a policy, we make 100 per cent provision for the unsecured book as soon as they become 180 days overdue. We continue to make efforts for collection and recovery to ensure their maximisation in recovery,” said Devang Gheewalla, Group Chief Financial Officer, Kotak Mahindra Bank.
“Once we realise that beyond this the chances of recovery are remote, post an assessment we write it off. So, this write off is a part of a normal process. Over the last few years, the unsecured loan book has grown and continues to grow. We have also highlighted our aspirations to be in mid-teens in our unsecured portion. We will continue to grow there. There is no impact of this write off on our aspiration or our growth,” Gheewalla said.
On the liabilities side, the average term deposits increased by 35 per cent Y-o-Y in the fourth quarter to Rs 2.25 trillion while current and savings account deposits increased by 3 per cent and 5 per cent on a year-on-year basis respectively.
The credit-deposit (CD) ratio of the bank in the quarter under review stood at 83 per cent sharply down from 88 per cent in the quarter ended in December 2023.
“The reduction is due to the deposit inflow we saw in March. We will have challenges to maintain it at that level but as the balance sheet grows we expect CD ratio to be in the range of 86 per cent to 87 per cent which was the annual average last year,” Gheewalla added.
As at March 31, 2024, gross NPA ratio was 1.39 per cent and net NPA ratio was 0.34 per cent as compared to 1.78 per cent and 0.37 per cent respectively at March 31, 2023.
Capital Adequacy Ratio of the bank, as per Basel III, as at March 31, 2024 was 20.5 per cent and CET1 ratio of 19.2 per cent.
The bank’s board recommended a dividend of Rs 2.00 per equity share having face value of Rs 5, for the year ended March 31, 2024, subject to approval of shareholders.
(Disclaimer: Entities controlled by the Kotak family have a significant holding in Business Standard Pvt Ltd)