Kotak Mahindra Bank (KMB) today reported a 32 per cent rise in its December quarter net profit at Rs 945.16 crore as the fourth-largest private lender's growth numbers were impacted by higher provisions for the erstwhile ING Vysya Bank, which merged with it.
The bank's consolidated profit after tax was Rs 716.61 crore in the same period last fiscal and Rs 941.89 crore in the preceding September quarter.
In November 2014, Kotak Mahindra Bank had announced acquisition of the mid-sized private lender in an all-share deal worth Rs 15,000 crore. The KMB-ING Vysya Bank merger came into effect from April 1 last year.
On a stand-alone basis, Kotak Bank's core net interest income stood at Rs 1,766 crore in the third quarter ended December, up 5.2 per cent over the preceding quarter, while advances rose 3.3 per cent on a q-o-q basis.
The bank's overall provisions shot up to Rs 261.08 crore in the third quarter as against Rs 42.18 crore in the year-ago period and Rs 196.66 crore in the preceding quarter.
The management said this was on expected lines and there were no surprises, and reiterated guidance of credit costs in the 0.80-0.85 per cent levels for the entire fiscal.
"The bulk of pain will be coming this year and it will be business as usual from the next fiscal," Kotak Bank Joint MD Dipak Gupta told reporters after the results.
He said credit costs will get compressed to 0.35-0.40 per cent, a tad higher than its own number pre-merger, from the next fiscal onwards.
Recoveries from stressed accounts, Gupta added, have been lower than expected, but blamed it on systemic issues, saying "being a smaller player in many of the consortia, there is little the bank can do".
"When it comes to stress, we believe in recognising the problem upfront and recognising it as an NPA (non-performing asset)," he said further.
Net fresh slippage stood at Rs 30 crore for the reporting quarter while gross NPAs came in at 2.01 per cent on December 31 as against 2.08 per cent in the preceding quarter and 1.58 per cent in December 2014 quarter.
On the merger process, Gupta said the consumer-facing business on the liabilities side is where the integration is yet to be completed, which will be over in the next 3-4 months.
Net interest margin for the quarter under review was 4.3 per cent and Gupta said efforts are under way to push it to the bank's earlier average of 4.5 per cent.
The bank has been impacted due to a higher rate on savings
deposits offered to customers of ING Vysya Bank, Gupta said.
The share of the low-cost current and savings account deposits in its overall base read 35 per cent.
The overall capital adequacy was 16.2 per cent, with core tier I at 15 per cent.
Gupta said the bank continues to invest in digital initiatives and this forms an important part of the Rs 250 crore IT budget for the fiscal.
The number of branches was 1,298 as of December 2015, which will go up to 1,400 by December 2017.
The stock closed 1.30 per cent down at Rs 667.15 on BSE.
