Kotak Mahindra Bank Q1 results: Net profit up 79% at Rs 7,448 crore

Kotak Mahindra Bank Q1 results: The bank's deposits grew by 21 per cent Y-o-Y to Rs 4.35 trillion at the end of June 2024

Kotak Mahindra Bank on Saturday reported a consolidated net profit of Rs 7,448 crore for the first quarter of FY25 (Q1 FY25), a growth of 79 per cent over the same period last year.

The bank had posted a consolidated net profit of Rs 4,150 crore in Q1 FY24.

The consolidated PAT (profit after tax) for the recently concluded quarter includes gains from divestment of 70 per cent stake in Kotak General Insurance Company to Zurich Insurance Group.

Bank in a statement said on a standalone basis, the private sector lender reported a net profit of Rs 6,250 crore in Q1 FY25, up from Rs 3,452 crore in Q1 FY24.

 

Its net interest income (NII), the difference between interest earned and interest expended, grew by 10 per cent to Rs 6,842 crore in Q1 FY25 as against Rs 6,234 crore for Q1 FY24. The Net Interest Margin (NIM) moderated to 5.02 per cent for Q1 FY25 from 5.57 per cent a year ago, according to the analyst presentation filed with stock exchange (BSE).

In the post-result virtual media conference Devang Gheewalla, Group Chief Financial Officer said “NIM is lower by 22 basis points over the two quarters. In March 2024, we had the Sonata transaction (acquisition of microfinance business) towards the year-end, which increased the yield and NIM. Otherwise ideally, NIM should have fallen as the deposit challenge continues for the last three quarters.”

The continuing challenges in the low cost deposits has put pressure on the cost of funds. It continues to impact NIMs. Also during Q1 due to RBI’s IT embargo, there was an impact on high yield unsecured book. The bank also could not issue new credit cards that also impacted the yield on advances. Plus, there was some liquidity at the beginning of the quarter which got deployed onto slightly lower yield assets, Gheewalla said.

Fees and services income expanded by 23 per cent Year-on-Year (Y-o-Y) to Rs 2,240 crore in Q1 FY25 from Rs 1,827 crore in Q1 FY24, the bank said in a statement filed with the exchange.

The bank's advances increased by over 20 per cent Y-o-Y to Rs 4.05 trillion as of June 30, 2024. Home loans and loan against properties (LAP) pool expanded by 17 per cent Y-o-Y to Rs 1.10 trillion. The credit card book grew by 29 per cent Y-o-Y to Rs 14,644 crore at the end of June 2024. The corporate loans grew 21 per cent Y-o-Y to Rs 93,581 crore.

The deposits grew by 21 per cent Y-o-Y to Rs 4.35 trillion at the end of June 2024. The share of low-cost deposits – Current Account and Savings Account (CASA)- declined sharply to 43.4 per cent at the end of June 2024 from 49 per cent a year ago.

The asset quality profile of the bank improved with gross non-performing assets (NPA) declining to 1.39 per cent in June 2024 from 1.77 per cent in June 2023. The net NPAs also declined to 0.35 per cent in June 2024 from 0.40 per cent a year ago.

Referring to microfinance business, Gheewalla said there are some signs of rise in delinquency in some geographies where bank is lowering disbursements. Bank has tightened norms for credit and disbursements.

Its provision and contingencies rose by 58.3 per cent YoY to Rs 578 crore in Q1Fy25. The provisioning part includes the micro finance business. There was also an increase in provisioning in unsecured business especially credit and personal loans. It is in lower ticket loans, he added.

The capital adequacy ratio stood at 22.4 per cent with Common Equity Tier I of 21.3 per cent at the end of June 2024.

(Disclosure: Entities controlled by the Kotak family have a significant holding in Business Standard Pvt )